Valuation Methodology
Our valuation methodology combines recognized income and market-based approaches to provide accurate, defensible valuations tailored to each client's business. We apply methods such as the Free Cash Flow approach, Excess Earnings method, and market comparables to ensure a comprehensive, transparent assessment of value.
Valuation Methodology
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Free Cash Flow Valuation:
The Free Cash Flow (FCF) approach values a business based on the projected cash flows it can generate for investors, discounted to their present value using an appropriate rate of return. It is widely used for private companies as it focuses on the actual economic benefit available to owners or investors after operating and capital expenses.
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Excess Earnings Method:
The Excess Earnings Method values a business by separating the return on tangible assets from the excess profits attributable to intangible assets, such as goodwill. It is especially useful for valuing small, privately held businesses where intangible value plays a significant role.
Market-Based Approach
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Guideline Public Company Method:
The Guideline Public Company Method estimates the value of a private company by comparing it to similar publicly traded companies, using valuation multiples such as price-to-earnings or EV/EBITDA. This method is best suited for businesses with strong financials and market presence comparable to listed firms.
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Guideline Transaction Method:
The Guideline Transaction Method values a business by analysing actual sale transactions of comparable private and public companies, using observed multiples to estimate value. It reflects real market behaviour and is especially useful when reliable data on similar completed deals is available.
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Prior Transaction Method:
The Prior Transaction Method (PTM) determines a company’s value based on its own historical sale or investment transactions, such as previous equity raises or buyouts. This method is useful when recent, arms-length transactions involving the company reflect fair market value.