The Need for Business Valuations
What a business is valued at can impact strategy, direction and decision-making for all key role-players or potential role-players in the business. It is important to get it right.
At Grid Forensic Accounting, we calculate the value of a business to assist those buying a business, selling a business, shareholders, potential investors and others with a vested interest in the business to understand the what the business is worth and actions that they may need to take in terms of building the business further. Other reasons business valuations are also often required are for: divorce proceedings, in the case of retirement, for key-man insurance or business assurance applications.
As Forensic Accountants, we are specialists in providing the in-depth analysis required to give you peace of mind. Through our business valuations process, you will receive a good understanding of the health of the company, become aware of any red flags or suspected fraud and be provided with a fair report. In addition, a valuation performed by a forensic accountant is also suitable for use in a court of law. (To read more about the role of the Forensic Accountant, click here).
Whatever your situation, we can provide you with a reliable business valuation to suit your needs.
We assist in detecting and investigating suspected irregularities or financial crime. Through multiple-stage detection and investigation processes, we obtain, secure and present evidence. This can be directed internally (towards employees and internal collusion); externally (towards suppliers, subcontractors, third parties to contractual arrangements); or a combination of internal and external (towards employee collusion with third parties).
How Do We Evaluate What a Company is Worth?
Whether you are buying a business, selling a business, in divorce proceedings, looking to buy shares in a business, restructuring the business ownership, retiring or need to ensure your key person is insured, the true value of a business is not easily ascertained – it is always best to consult an expert.
At Grid Forensic Accounting, we obtain relevant financial information from a business and then use one of the following valuation methods, amongst others, to value the business:
▪ Market Capitalisation
▪ Times Revenue
▪ Earnings Multiplier such as Price/Earnings Ratio
▪ Discounted Cash Flow
▪ Net Book Value/Net Asset Value
▪ Liquidation Value
The type of method we follow will be determined by the type of business we are valuating. To discuss this and our process in greater detail please feel free to contact us or book an obligation-free consultation.
The Cost of a Business Valuation
Our costing for business valuations is based on the complexity of the business and the type of valuation report you require.
Grid Forensic Accounting provides 3 types of valuation reports:
1. Level 1 Valuation – A high-level overview of the business’s financial position through the analysis of financial statements and management accounts. Findings are presented in a letter format signed off by a Chartered Accountant (SA).
2. Level 2 Valuation – A Level 1 Valuation, including confirmation of the accuracy of financial statements and management accounts, interviews with relevant personnel, and highlighting red flags. Findings are presented in a report format signed off by a Chartered Accountant (SA).
3. Level 3 Valuation – A Level 2 Valuation, including a full line-by-line analysis of the business’s accounts, analysis of tax returns, and a business risk analysis. Findings are presented in an in-depth report signed off by a Chartered Accountant (SA).
We will need to discuss your specific needs in greater detail with you in order to provide you with an accurate cost estimate.