Business is
called economic activity aimed at making profit. Often as a synonym for the
word "business" is the definition of "entrepreneurial
activity". At the same time, it is worth distinguishing business and
organization, since business can function both on the basis of one organization
and within the framework of several organizations. Business is any investment,
commercial, industrial company, or a service company that engages in economic
activities. Most often, businesses function in order to provide legal and
physical persons with any goods or services.
Business
valuation is the process of determining the current market value of a business
or a stake in it. The need for it can arise for various reasons, but sooner or
later, every owner of the company may face difficulties associated with its
implementation. Without having reasonable information about the cost, it is
very difficult to make the right decisions about acquiring or alienating
property rights. Thus, the cost of a business or a share in it is the
information that every leader needs for effective activity.
The
evaluation company FM Consulting offers its high-quality and professional
services in determining the value of the business. Based on the results of the
assessment, you will be able to make a correct and informed decision regarding
the future of your business, which brings you income.
Business
evaluation is usually understood as the following activities:
•
Evaluation of a controlling stake in the company. Such a task is a priority and
the most needed, when business valuation is meant. It allows you to get the
most complete idea about the current value of the company as a whole and the
majority stake in particular.
•
Determining the value of a minority stake. In this situation, the value of the
share included in the minority stake in the organization is determined.
• Valuation
of the company's shares, which are quoted on the market at the current time.
This direction is chosen in special, special cases, if necessary. At the same
time, the whole evaluation is reduced to analyzing the state of the market, the
discount rate and the study of quotations.
•
Evaluation of the company's property complex. In this case, the specialist
determines the market value of all the company's fixed assets, including
structures, buildings, structures, utilities, networks, land, cars, vehicles,
machinery and equipment. In addition, specialists carry out a thorough analysis
of all inflows and outflows of company funds.
The
assessment takes into account the following features that characterize the
business as a kind of commodity:
• Each
business is inherently an investment commodity, since the investor invests
money in it in order to return these funds in the future and cover all the
risks. Revenues and expenses associated with doing business are not permanent
in time - cash flows are generally heterogeneous. In addition, for sure no one
knows the exact profit that the investor will eventually receive, the values
that are indicated in the project are of a probabilistic nature. Therefore,
it is worth considering all the risks associated with investing in the
business, investments may not return, or not cover all the risks. If a business
has less profitability than the sum of all costs that goes to its development
and maintenance, then it is unattractive in its investment component.
Summarizing the above, business valuation is the future value of all the
investor's income, discounted to date.
• All
business characteristics are dependent not only on the processes occurring
within it, but also on environmental factors. So, the instability of the
Russian economy can cause the business in such conditions to be unstable. Also,
on the contrary, in the case of large business, which is a priority or forming
for some branch of industry or economy, its instability can lead to volatility
in the market. All this shows that it is necessary to constantly and
qualitatively regulate the business, which consists in the analysis of
environmental factors, which is taken into account when determining its value.
• The
impact of business on the market and the industry generates its impact also on
the economy of the country as a whole. It is important for the state to take
any measures to regulate business. In some cases, it even requires the
formation of stable prices for business, for example, when an enterprise has
capital invested in the capital.
• Business
is a single whole. However, in the market it can be sold as a whole complex,
and by its separate components. Thus, the product is not only the entire
business system, but also its elements. Therefore, FM Consulting, in some
cases, when this is in line with the purposes of valuation, determines the
market value of various separate assets of the enterprise.