Category: Business valuation
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Investing in a non-listed company
When a company invests in other companies, the investment itself matters in a business valuation — not just the core operations. In practice, we don’t simply take the initial investment cost and stop there. During valuation, we assess how those invested companies are actually performing. Think of it as a mark-to-market concept: In many cases,…
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Cash projections that don’t look comfortable.
When we validate a company’s value using the Discounted Cash Flow (DCF) method,we usually forecast cash flows for the next 5 years. Sometimes, the projected cash balance looks… tight. This often happens because of things like: At first glance, it may look like the business “cannot survive”. This is where judgment matters. If: Then reviewing…
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A company is loss-making and has debt. Does it still have value?
This is a fragile situation.The company is losing money and has obligations to pay interest and loan instalments. But loss ≠ zero value. Here’s what we usually look at beyond the headline loss: If we ignore fixed costs for a moment, is the business profitable at the variable cost level?Fixed expenses don’t automatically increase with…
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M&A can take years.And sometimes… the deal dies before it starts.
There are many cases whereCompany A wants to buy Company B.Company B also wants to be bought. But the documents are nowhere near audit-ready. More than one set of accounting books.Numbers don’t reconcile.Key information depends on only one person. These are very common issues for small companies. So even if you’re not planning to sell…
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Legal, Accounting & FA (Financial Advisor): Why you need all 3 in M&A
Because Legal cannot value a business, Accounting cannot review contracts, and FA cannot audit financial statements. That’s why in an M&A (Merger & Acquisition), you need all 3 parties. After due diligence, if there are no hidden skeletons in the closet, the financials are audited, and the FA has completed the valuation, both buyer and…
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Why we usually need 3–5 years of historical performance in business valuation
Sometimes a company’s performance looks like a wave —up one year, down the next. This doesn’t always mean the business is unstable. It could be: Looking at several years helps us identify patterns, not just numbers. For example: Very often, we see cases where revenue remains strong, but net income drops sharply in certain years.When…
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Valuing a Business That Doesn’t Last Forever
A client recently asked us to value a business — but it will only last for another 20 years. This is common for concession-based businesses (e.g. utilities, infrastructure, mining, ports). Valuing these businesses is very different from valuing a “normal” operating company. In most valuations, we assume the business will operate forever (the going-concern assumption),…
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How do you do a valuation when the owner’s income is mixed with expenses?
“We own the company, we also manage it.So sometimes we get paid via dividends… sometimes via expenses.” When valuing family businesses, this is actually very common. Owner compensation is often mixed into: So the financial statements don’t always show the real operating cost of the business. As a consultant, what we usually do is ask…
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One of the small nightmares in business valuation: double-booked items.
This has never happened to me with listed companies that have strong audit processes. But with small companies?It doesn’t happen often — but when it does, it definitely slows things down. When we do a business valuation, we need to understand everything:revenue, costs, investments — basically how all the numbers in the financial statements connect.…
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One of the most common challenges in M&A: Price
A customer recently called to discuss a company they were considering investing in. The discussions had been going on for months.Both parties were genuinely interested. Everything moved forward smoothly —until the conversation reached one topic: price. After evaluating the target company, it became clear that the buyer’s price and the seller’s price were far apart.Very…
ORNA Company Limited 