An objective corporate value does not exist in practice. While entrepreneurs who want to sell their business see not only the tangible assets but also the work they have invested in the company in the past, the acquirer thinks about what they can do with the company in the future and how it can finance the purchase price. Both therefore often come to different value and price expectations when it comes to the purchase price. A legally binding procedure for the company valuation does not exist. Science and practice have therefore developed different methods to determine the enterprise value. Each procedure can only give indications for the determination of the value and thus of the price.
As an example, the most common methods are described below.
If a company is to be sold, a price must be determined for it. In practice, there is no established procedure for this. At the same time, the seller usually has quite different ideas about the value of his company than the buyer. Thus, determining the enterprise value depends entirely on the process. Therefore, this value may not always match the price of the business. This guide gives you all the important information about company value and various calculation methods.
Every buyer wants to get an accurate impression of the company he wants to take over. Corporate value also depends on how carefully you have prepared all relevant documents. In general, the more doubt the buyer has, the lower the selling price will be! Because buyers want to take the least possible risk. The information includes i.a.
There are several steps to follow in company succession. Determining the purchase price for a company purchase is a difficult task. The purchase price is intended to reflect the value of the company, which is composed of different factors.
Various methods of determining the purchase price, such as the comparison method or the income value method, help you to determine the correct purchase price for the company purchase and takeover.
Also in the purchase price and enterprise value determination, it is highly advisable to consult a consultant to buy a company. In general, supply and demand in the company purchase determine the amount of the price. That is, if there are several potential successors, often wins the one who makes the highest bid for the company purchase. If you are the only interested party in the company purchase, there is room for negotiation in your favor. But fair price determination should be with every company purchase.