The evaluation field is littered with contradictory reports and calculations, because many experts will tell you that it is an art and a science. The business assessment process consists in discovering the right information and to do the calculations. Getting an agreement on the value of an enterprise consists of getting an agreement on the appropriate facts and interpretation of the facts because it is about following a defined process.
So the evaluation process can often take time and follow a rigorous path to:
Data gathering.
Data analysis.
Financial projections.
Industry and market evaluation.
Business strategy.
Value calculations.
The reason for the complex process is that the evaluation is as much on the discovery it concerns the calculation. The commercial value must include figures and corporate pilots in terms of client. This may be different if the customer is a supplier or a buyer.
Often the evaluator of the company must interpret information that can be aged 1 to 3 years or more. It is therefore an iterative process with the customer to understand how particular details affect the value of the company.
In many cases, the owner of the company or the buyer already has a range of value to the mind – what they need is their interpretation of the cross-commercial value. This is where a quick assessment of the company helps.
So, what is a fast business valorization?
A quick operational assessment that has a detailed analysis will usually take 24 to 48 hours. A quick calculation can often be done in 1-2 hours, but the discovery process can take longer.
There are three key steps in a quick assessment:
Collect past financial information and a year to date.
Ask some key questions about business profitability, growth, business processes, competitive advantages and industry issues.
Systemized process of calculation and reporting.
Once the basic calculations are completed, the corporate evaluator should consider the result of different points of view. It is when the weather is needed, and therefore a good valuation must take at least 1-2 days for the best result.
What are the limits of a rapid commercial assessment?
Fast trade evaluation does not help when it is invoked in legal or commercial conflicts. In these cases, valuation must be based on solid evidence and reasoning. The interpretation of financial statements, trade and industry and other factors must be taken into account when producing a defensible report.
Other limitations include:
Lack of clear and credible financial reports available.
A company that has had dramatic changes in profit performance (such as going great losses to profits or vice versa).
A company whose value is significantly dependent on intangible factors such as relations with key owners, intellectual property or goodwill.
Unavailability of corporate owners to discuss the company.
What can an evaluation of a fast business use?
At its simplest level, a quick assessment will confirm in the buyer or the spirit of the seller they make the right decision. This means that negotiation can be fast and concise. It gives the customer the power to definitely define the limits of negotiation and can reduce the time taken to make a decision.
But it will also discover the opportunities for the company to increase its value. This is useful to the buyer in understanding what they bring to the table and help make the seller feeling convinced that they defend the value of the company with good strengths and opportunities.
This can also help confirm the limits in the settlement of disputes between trading partners. Disputes are not always on a difference of 5 to 10%. It is more likely that they differ by several orders of magnitude. Fast economic evaluation can solve this problem in less than 2 days.
