BUSINESS EVALUATION

The evaluation of any business is a result of the evaluation of your financial statements, an understanding of your operations and industry as well as your brand strategy. TMI can evaluate your potential and feasibility in terms of your acquisition, sale or reorganization.

How much your business is worth depends on many factors, from the current state of the economy through your business’s balance sheet but in theory, there are three major factors a third party examines:

BUSINESS EVALUATION

The evaluation of any business is a result of the evaluation of your financial statements, an understanding of your operations and industry as well as your brand strategy. TMI can evaluate your potential and feasibility in terms of your acquisition, sale or reorganization.

How much your business is worth depends on many factors, from the current state of the economy through your business’s balance sheet but in theory, there are three major factors a third party examines:

ASSETS

The asset value is the equivalent of the total up of all the investments made in the business. A going concern asset-based approach lists the business net balance sheet value of its assets and subtracts the value of its liabilities. (Assets – Liabilities)

A liquidation asset-based approach determines the net cash that would be received if all assets were sold and liabilities to third parties were paid off.

ASSETS

The asset value is the equivalent of the total up of all the investments made in the business. A going concern asset-based approach lists the business net balance sheet value of its assets and subtracts the value of its liabilities. (Assets – Liabilities)

A liquidation asset-based approach determines the net cash that would be received if all assets were sold and liabilities to third parties were paid off.

EARNING VALUE

The Earning value is determined by predicting the business true value in producing future profits and cash flow. This approach projects future sales by using the company’s record of past earnings and normalizing them from unusual revenue or expenses and establishing estimates as per market growth. The sum of all future months or years projected is then brought back at a present value amount (today’s value) at a capitalization factor that is a reflection of what would be the expected ROI desired from any interested investor. As per rule of thumb, risky investments represent a higher capitalization rate than more secure ones.

EARNING VALUE

The Earning value is determined by predicting the business true value in producing future profits and cash flow. This approach projects future sales by using the company’s record of past earnings and normalizing them from unusual revenue or expenses and establishing estimates as per market growth. The sum of all future months or years projected is then brought back at a present value amount (today’s value) at a capitalization factor that is a reflection of what would be the expected ROI desired from any interested investor. As per rule of thumb, risky investments represent a higher capitalization rate than more secure ones.

MARKET VALUE

The market value approach is an attempt to establish the value of your business by comparing your business to similar businesses that have recently been sold on the market. This method works well if there are a sufficient number of similar businesses sold. Usually, it is easier to establish the market value of a specific asset or liability and add it up than to establish the total value of a company as a whole.

MARKET VALUE

The market value approach is an attempt to establish the value of your business by comparing your business to similar businesses that have recently been sold on the market. This method works well if there are a sufficient number of similar businesses sold. Usually, it is easier to establish the market value of a specific asset or liability and add it up than to establish the total value of a company as a whole.