The value of valuation to the future of your business
Do you have an accurate picture of your company’s current value and prospects for future growth? In this era of financial uncertainty, it is important to know the true value of your business, for a variety of reasons. For example, if you are looking to sell, obtain external finance, or purchase another company, an accurate valuation is crucial, since buyers and finance providers will likely have different ideas to yours on how much your business is worth.
Even if you think your profitability and future prospects are looking good, a formal valuation is often necessary to provide reassurance for investors and stakeholders. It will also give you the confidence to plan for the future, and subsequently track the effectiveness of your strategic decisions.
“Enhancing the wealth of a company’s investors and stakeholders is often a key driver in decision-making for management teams”, says Rob Farmer, facilitator of the University of Auckland Executive Education course Corporate Valuation – measuring business worth. “Understanding how to value a business can lead to an appreciation of where value lies and how it can be protected and increased.”
“A case in point is Comvita, the New Zealand honey and related products producer, which has experienced some fluctuations in its valuation in the past two years”, he says. “Stock prices have peaked, fallen and then risen again. However, working with core valuation tools and considering future forecasts for margins and growth, we can understand these fluctuations. Then, by cross-checking the value of the business against a market valuation of similar traded companies, we can come up with a reasonable estimate of the company’s current value.”
Rob has a strong background in finance and banking, and now teaches internationally at leading investment banks, consultancies, legal and investment firms.
His two-day valuation course is complemented by the Executive Education course Financial Modelling – a practical approach, facilitated by Mary Farmer. This course is designed to help business owners, accountants and finance professionals make long-term decisions that will ultimately produce superior financial performance and generate market-leading results, thus increasing the value of the business.
“At the heart of any business decision is a strong and deep analysis of the choices faced by the business,” says Mary. “Do we invest in or acquire another business to help our enterprise grow? What are the likely impacts of regulations, tax structure, buyer behaviour and market fluctuations? The faster and more accurately a financial model can be built, the more able the business will be to make the right decisions.”