overview of company valuation

company valuation is the analytical process of assessing a business's total worth. it considers various factors like revenue, profits, assets, liabilities, market position, and future potential. commonly used by investors, lenders, and business owners, valuation helps in mergers, acquisitions, funding, and strategic planning.

there are several valuation methods such as:

• discounted cash flow (dcf)

• comparable company analysis

• asset-based valuation

accurate valuation ensures better financial decisions and negotiations.

company valuation process 

company valuation isn’t registered like a company, but it follows a structured assessment process conducted by valuation professionals or registered valuers under the companies act, 2013.

steps involved:

1. appoint a registered valuer
   usually done through professionals recognized by the ibbi (insolvency and bankruptcy board of india).

2. collect business data
   includes financials, assets, liabilities, market data, and forecasts.

3. choose valuation method
   based on business type and purpose — dcf, market approach, or asset-based.

4. prepare & submit report
   a detailed valuation report is created and submitted to stakeholders or authorities as needed (e.g., mca during mergers or issue of shares).

documents required for company valuation

1. financial statements
   audited balance sheet, profit & loss account, cash flow statements (last 3 years preferred).

2. company incorporation documents
   certificate of incorporation, moa (memorandum of association), aoa (articles of association).

3. asset & liability details
   fixed asset register, loan/debt schedules, inventory, receivables, and payables.

4. tax documents
   income tax returns, gst filings, and tax audit reports.

5.  

benefits of company valuation

1. accurate business worth
   helps determine the true financial value of your company for informed decision-making.

2. fundraising support
   essential for startups and businesses seeking investors or venture capital.

3. mergers & acquisitions
   crucial for negotiating fair deals during buying, selling, or merging businesses.

4. better strategic planning
   guides future growth, restructuring, or exit planning based on valuation insights.

Eigibility for company valuation

1. any registered business entity
   private limited, public limited, llp, opc, partnership firms, and sole proprietors can get a valuation done.

2. companies undergoing transactions
   required during mergers, acquisitions, fundraising, or issuing new shares.

3. startups seeking investment
   valuation is essential for startups looking to raise capital or onboard investors.

4. businesses with tangible/intangible assets
   companies owning physical or intellectual assets (like patents, brand value) are eligible for valuation.