Transfer Pricing > Valuation of Companies, Actions And Intangibles
Valuation of Companies, Actions And Intangibles
The value of a company or business is marked by the resources it is capable of developing and generating. For this, it is necessary to analyze the multiple scenarios in which it can be developed as the consequences and probabilities of each of them. The first step to start the process is the identification of the most appropriate valuation methodology. This is chosen based on the characteristics, the capacity to generate flows and the information available of the company.
- In the case of companies in operation and with an adequate flow generation, the Discounted Cash Flow (FCD) method is used, considered the one with the highest acceptance in such cases.
- Another widely used method is the Comparable Multiples, which is based on financial and functional information of independent companies selected as comparable. Indicators with sales, EBIT, EBITDA, market capitalization, company value, among others, are used to apply this methodology.
- The methodology for applying Options (Real Options) involves using the technical aspects related to the valuation of real options to a company. Basically it can be used because there is uncertainty about the evolution of the business, and it allows to appreciate the operational flexibility of an organization and its strategic value.
Analysis of the target company.
Selection of the most appropriate method or valuation methods.
Development of valuation models.
Application of the results to the target company.
Selection of a rating range.