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Valuation of companies

In today’s world, business men constantly make strategic decisions in the sense of acquiring new business units, merge, split and sell non-strategic business lines.

To be able to implement these decisions, executives require information that allows them to determine a reference value of negotiation.

The value of a company or business is marked by the resources that is capable of developing and generating. To this end, it is necessary to analyze multiple scenarios in which it may develop as well as the consequences and probabilities of each one of them. Only a professional and specialized work guarantee greater objectivity in the evaluation of each of these scenarios offering a proper assessment.

The identification of the most appropriate valuation methodology is the first step to start the process. This is chosen according to the characteristics of the company’s ability to generate flows and available information.

In the case of companies in operation and with a proper generation of flows, Discounted Cash Flow (DCF) method considering the one of greatest acceptance in such cases is used.
Another widely used method is the Comparable Multiples, which is based on information from independent companies selected as comparable.