The value of the company is the most important measure in every business decision. It determines the scope for increasing the capital as well as the distribution of the company’s shares. As the marginal price – the minimum price that the seller wants to achieve or the maximum price that the buyer is willing to pay – it controls the economical sense of the transaction.
Therefore, before making a decision about various strategic options, it is useful to gain clarity about the value of the own company or the target company. In the case of a Valuation Opinion, we determine this value professionally by market-standard methods (Multiple and Cash Flow method) and based on our results, give strategic recommendations. The Valuation Opinion relies on the finance planning of the considered company and describes in detail the derivation and reasoning of the value through the model of the company, unique selling points, and the parameters that establish the environment of the business.
A special case of company valuation is the so-called Fairness Opinion, which profits from the acquisition of companies listed in the stock market. The determination of the present value of the company does not play an important role here, but rather the backup of the value downwards. The supervisory board of the company for which an acquisition offer was made casts a statement towards their shareholders whether the equivalent value (cash or equity capital) is fair, meaning “achieved the market value from the view of the capital market”.
In addition to the valuation of companies, we offer other performance modules separately as well as before a transaction to support the decisionmakers – CEO and the board and the company owners. This could be e.g. the execution of a Due Diligence to verify the value of a company, the revision of a finance plan with respect to the investor’s criteria, the identification of the debt capacity or an analysis of a certain part of the market meaning a “pre-sounding” to evaluate the interest of the investor for a certain company or industry.
In the Due Diligence, the investor ensures that the given statements about the target company are correct and that there is a high probability that the investor is able to achieve his goals and expectations with the intended transactions meaning that the provided price is reasonable. After this process, the investor decides whether the transaction takes place or whether the investor has reason to walk away from the transaction.
We orchestrate the entire Due Diligence process for the purchase of a company. We organize the process of making a decision for the specialists (e.g. lawyers and auditors), clarify whether there are any conflicts of interest, and take care of the adequacy of the honorarium.
For a selling mandate, we support the seller with the compilation of the data and supervise this organization and usage of the consultant of the buyer. Here, the briefing and debriefing of the conversations of the managements with the Due Diligence examiners is important, which builds the foundation for later evaluations and negotiation of the buyer.
With regard to the finance planning, our additional value is twofold: first, we look at the planning from the perspective of the market meaning the buyer and identify any weak spots. Second, we put together our own valuation of the company on the basis of this panning. Here, it is important to us to convey a realistic picture to the seller from the perspective of the market of the value of the company. Only on the basis of realistic expectations, the seller is able to make the right decisions in the negotiations. Too low expected values might prevent the achieving of an optimal price, but too high expectations for the value of the company could be a potential deal breaker. With bigger transactions, it could be useful to talk to potential investors about a “pre-sounding” beforehand to reflect the expectations of an achievable market price.