Why we have so many questions when doing a business valuation

One of the most common methods we use to calculate a company’s value is the Discounted Cash Flow (DCF) model.

This approach requires not just the historical performance, but also a 5-year forecast — which means we need to deeply understand how the business actually operates.

If the company sells products, we break things down into price and quantity by product group.
Then we ask:

• How is the price determined? Market price or cost-plus margin?
• For quantity, what’s the production capacity?
• If it’s a trading business, are there any market or regulatory limits?

We also need to know about the investment plan — how assets are depreciated, when new investments are needed, and much more.

And that’s just the internal side.
We also look at industry data, to understand the market outlook and benchmark assumptions.

At the end of the day, we ask all these questions because we need to truly understand your business — to build the most realistic and credible projection possible.

Interested to know more about your company’s value? Contact us for more information. #ORNA #DCF #BusinessValuation