{"id":133,"date":"2019-10-04T05:56:43","date_gmt":"2019-10-04T04:56:43","guid":{"rendered":"https:\/\/kleosafrica.com\/blog\/?p=133"},"modified":"2023-11-10T05:01:47","modified_gmt":"2023-11-10T04:01:47","slug":"valuing-your-company","status":"publish","type":"post","link":"https:\/\/kleosafrica.com\/blog\/2019\/10\/04\/valuing-your-company\/","title":{"rendered":"Valuing your company"},"content":{"rendered":"\n<p>Valuation\ninvolves estimating the worth or price of a company. Different industries use\ndifferent methods to determine this value. Some industries use complicated\nquantitative models, while others use relatively simple approaches. Regardless\nof the methodology used, however, the valuation of a business incorporates not\nonly a financial analysis of the company, but also a subjective assessment of\nother factors that may be difficult to quantify, including:<\/p>\n\n\n\n<ul><li>Stage of the company<\/li><li>Management team assessment<\/li><li>Industry<\/li><li>Reason the company is being sold<\/li><li>Other general macroeconomic factors<\/li><\/ul>\n\n\n\n<p>There are\nnumerous reasons why an entrepreneur should know the value of her business.\nThese include:<\/p>\n\n\n\n<ul><li>To determine a sale price for the company<\/li><li>To determine how much equity to give up for partnership agreements<\/li><li>To determine how much equity to give up for investor capital<\/li><\/ul>\n\n\n\n<p>As noted\nearlier, the value of a business is influenced by a multitude of factors,\nqualitative as well as quantitative. Before a final value for any company can\nbe determined, the entrepreneur must identify and review these factors. This\nprocedure is commonly referred to as completing a \u201ccontextual factor analysis.\u201d\nIn other words, what is the general context in which the valuation is taking\nplace? A proper valuation of a company does not occur in a vacuum. A solid\nvaluation contextual factor analysis should include the following factors:<\/p>\n\n\n\n<ul><li>The historical, present, and projected cash flow of the company.<\/li><li>Who is valuing the company?<\/li><li>Is it a private or a public company?<\/li><li>The availability of capital.<\/li><li>Is it a strategic or a financial buyer?<\/li><li>The company\u2019s stage of entrepreneurship.<\/li><li>Is the company being sold at an auction?<\/li><li>The state of the economy.<\/li><li>The reason the company is being valued.<\/li><li>Tangible and intangible assets.<\/li><li>The industry.<\/li><li>The quality of the management team.<\/li><li>Projected performance.<\/li><\/ul>\n\n\n\n<p>Ultimately,\nthe value of a company is driven by the present and projected cash flows, which\nare affected by all the factors just mentioned. As Bill Sutter, a former\nventure capitalist, said to a class of MBA students, \u201cWhere does value come\nfrom? Cash flow. It does not come from assets or revenues. It comes from cash\nflow.\u201d<\/p>\n\n\n\n<p><strong>REFERENCES<\/strong><\/p>\n\n\n\n<p>Steven\nRogers \u2018\u2019Entrepreneurial Finance: Finance and Business Strategies for the\nSerious Entrepreneur\u2019\u2019 (2009: McGraw-Hill)<\/p>\n\n\n<div class='_form_1'><\/div><script type='text\/javascript' src='https:\/\/kleosafrica2.activehosted.com\/f\/embed.php?static=0&id=1&69F38ABCDE92B&nostyles=0&preview=0'><\/script>","protected":false},"excerpt":{"rendered":"<p>Valuation involves estimating the worth or price of a company. Different industries use different methods to determine this value. Regardless of the methodology used, however, the valuation of a business incorporates not only a financial analysis of the company, but also a subjective assessment of other factors that may be difficult to quantify.<\/p>\n","protected":false},"author":1,"featured_media":134,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[7],"tags":[48],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/posts\/133"}],"collection":[{"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/comments?post=133"}],"version-history":[{"count":3,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/posts\/133\/revisions"}],"predecessor-version":[{"id":147,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/posts\/133\/revisions\/147"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/media\/134"}],"wp:attachment":[{"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/media?parent=133"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/categories?post=133"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kleosafrica.com\/blog\/wp-json\/wp\/v2\/tags?post=133"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}