Author: ORNA Company Limited
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Debt Restructuring 🚨 Warning sign… or survival strategy?
Sometimes, the hardest part of reviewing a company is seeing how much financial pressure it has gone through. We recently evaluated a company with a history of losses and a significant amount of bank debt. Under normal circumstances, the repayment burden would have severely strained its cash flow. But instead of defaulting, the company negotiated…
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Why using P/E alone might be misleading
A recent client tried to estimate their company’s value by applying the P/E ratio of similar listed companies.While PE is one of the most popular methods being used , it’s not a recommended one for this company. Here is why. Two companies can be in the same industry…and still be completely different businesses. Different: And…
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📉 Revenue Down 3 Years in a Row… But Is the Business Actually Weak?
Recently worked on a valuation for a construction company. On paper, it didn’t look good. Revenue declined three years in a row. However, the company had a solid backlog — with signed confirmation letters from customers proving they won the bids. So revenue is coming but will the margins hold? In this case, valuation depended…
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Why we still need a management interview (even when we already have all the documents)
When doing a business valuation, yes — we have an information request list (IRL).Yes — we collect solid documents.Yes — we look at audited financial statements. But documents only tell us what happened.They don’t tell us why. For example:• Why did revenue drop last year?• Why did interest expense suddenly spike?• Was it a one-off…
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Why we still ask for internal financial statements (even when audited FS exist)
Usually when we do business valuation we focus on th audited financial statements where numbers have been verified by the auditors. However we still need to get the company’s internal financial statements because we need the latest information available. Business valuation is forward-looking.And internal FS give us the latest reality. We need to understand: Internal…
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Why a Business Valuation is like a Health Checkup
We were recently hired to value a company. No deal.No buyer.No IPO plan. So why do it? Because the management wanted to see their business from an outsider’s perspective. A valuation without an active transaction is actually very powerful. It forces you to ask: In many cases, the number is not the most important part.…
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“Our land is worth much more than book value.”
During an M&A pitch, management often tells us this. Totally fair point.But here’s the thing 👇 For business valuation, book value is usually not the issue. When we value a going concern, we mainly use DCF.That means the value comes from future cash flows, not how cheap or expensive the land looks on the balance…
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Why inventory on the balance sheet affects a company’s value
Inventory is not just a number sitting on the balance sheet.It directly affects future cash flow. When we analyze inventory, we look at days in inventory — because this tells us how long cash is tied up before turning into sales. We also look back at historical inventory levels.If some years are unusually high or…
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Why we always ask clients to group revenue sources
When we forecast a company’s performance, we don’t just apply “sales grow xx%”. Each revenue stream behaves differently. Different growth drivers.Different cost structures.Different risks. So instead of projecting total revenue as one line, we break it down: …and forecast both revenue and cost for each item, based on: This gives a much more realistic forecast…
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How to value a project-based company
Some companies don’t sell products every day.They earn money project by project. Think of real estate developers, EPC contractors, infrastructure projects, etc. So valuing them is very different from valuing a normal operating business. When we value a project-based company, we usually focus on 3 key things: 1️⃣ BacklogsBacklogs represent projects already secured but not…
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