Welcome to Axiom Consultants & Partners Accounting, Audit, Tax & Business Advisory Services
In today’s world the most innovative organizations are seeking to unlock greater value from existing assets and on-going capital expenditures as well as new acquisition’s, investments and complex corporate arrangements.
In the mean while regulators are demanding greater transparency through fair value reporting, putting more emphasis on the importance of valuation analysis.
Our team is well structured around industry sectors and can assist you with all your valuation and financial modelling requirements.
Business Profile Analysis
The initial step involves gathering and comprehending information about the subject company. This analysis delves into the company’s industry, target market, competitive landscape, and operational strategy.
Historical Financial Statement Review
A thorough examination of the company’s financial statements, typically spanning the past 3-5 years, is undertaken. This review focuses on key metrics such as revenue, profitability, debt levels, and cash flow trends.
Market Comparable Analysis
This step assesses external market factors that may influence the valuation. It considers industry trends, prevailing economic conditions, and recent transactions involving comparable businesses.
Valuation Methodology Selection
Depending on the purpose of the valuation and the availability of data, appropriate valuation methods are chosen. The three main approaches commonly employed are the market approach, income approach, and cost approach.
Business Projection Discussion
Forecasts concerning the company’s future performance, particularly regarding revenue growth and profitability, are analyzed and discussed.
Projection Assumption Validation
The assumptions underpinning the business projections are meticulously reviewed to ensure their reasonableness and accuracy.
Enterprise Value Calculation
Following the preceding steps, a chosen valuation method is utilized to calculate a final estimated value of the business, often referred to as the enterprise value.
Choosing the Right Valuation Company
Industry Expertise
Look for companies with experience in your specific industry and the valuation methods relevant to your business type.
Proven Track Record
Research the company’s reputation and ensure their valuation professionals hold relevant credentials and certifications.
Tailored Approach
Understand their valuation methodologies and confirm they align with your specific needs and objectives.
Clear Communication
Choose a company that prioritizes clear and transparent communication throughout the valuation process.
Benefits of Using a Business Valuation
Timely Completion & Efficiency
Focus on running your business, let a valuation firm handle the time-consuming process efficiently.
Expert Guidance & Informed Decisions
Our team of qualified professionals can handle your valuation needs effectively and provide insights for informed decision-making.
Reduced Errors & Enhanced Accuracy
Avoid potential bias and inaccuracies by leveraging the experience and expertise of qualified professionals.
Wide Range of Applications
Valuations are critical for various purposes, including internal needs, financial reporting, legal compliance, and even litigation.
Unbiased & Objective Perspective
Reputable firms like AXIOM deliver independent and objective assessments, ensuring a fair and accurate representation of your company’s value.
Tools used in Business Valuation
Market Based Method
Applicable solely to publicly traded companies, this method calculates the company’s value by multiplying the current share price by the total number of outstanding shares.
This method involves meticulously comparing the subject company to similar businesses that have recently undergone a sale. By analyzing the sale prices of these comparable companies, one can arrive at an estimated value for the subject company.
Income-Based Methods
This method forecasts the company’s future cash flows and then discounts them to their present value. This process incorporates a discount rate that reflects the inherent risk associated with the projected cash flows and the time value of money.
This method estimates the company’s value by multiplying its historical or projected earnings by a predetermined capitalization rate. Variations of this method may use EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) or NOPLAT (Net Operating Profit Less Adjusted Taxes) as the earnings metric.
Asset-Based Methods
It simply calculates the company’s net worth by subtracting its total liabilities from its total assets.
Similar to book value, this method may consider the fair market value of the company’s assets instead of their book value.
This represents the estimated price a willing buyer would pay to a willing seller in an arm’s-length transaction, absent undue pressure. Replacement Cost: This method estimates the cost of replacing the company’s assets with new assets of equivalent quality.
Uses of Business Valuation
Strategic Planning
A clear understanding of your worth informs growth goals, resource allocation, and overall business strategy.
Employee Stock Ownership Plans (ESOPs)
Valuation helps determine the fair market value of shares offered to employees in ESOP programs.
Exit Planning
When considering selling or transitioning your business, a valuation establishes a realistic asking price and facilitates smooth ownership transfer.
Bankruptcy
In unfortunate circumstances, business valuation plays a role in restructuring or liquidation proceedings.
Financial Reporting
Certain accounting standards require companies to report the fair value of specific assets or liabilities.
Litigation
Valuations become crucial for legal disputes involving shareholder disagreements, divorce settlements, or bankruptcy proceedings.
Tax Purposes
Business valuations can help calculate estate taxes, gift taxes, or determine the value of assets for tax calculations.
Mergers & Acquisitions
Valuation is key for both sides – assessing potential targets or determining your company’s attractiveness as an acquisition candidate.