Category: Business valuation
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đĄ Why Companies Sometimes Choose Loans Over Equity
When a business needs money, thereâs a big decision to make:Borrow it (loan) or sell a piece of the company (equity)? Hereâs the twist:For some companies, a loan can actually be cheaper than equity.đ° Interest rates might be lower than the returns shareholders expect. ButâŚâ Dividends? Optional.â Interest payments? Non-negotiable. Miss them, and youâre in…
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Why do we look at cash flow instead of net income?
When we use the DCF method (Discounted Cash Flow), the focus is right there in the name â we discount the future cash flows of the company to their present value. So why not just use net income?Because profit on paper doesnât always mean cash in the bank. A company can show a profit but…
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Why Adjusted Book Value Matters in Valuation
Adjusted Book Value (ABV) isnât the most popular methodâbut that doesnât mean itâs not important. In some cases, when valuing a business, itâs the method selected as the most suitable one. Why? Because sometimes, the real value lies in the assets, not the operations.Especially in businesses that: In some cases, the land alone could be…
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âWho would want to buy my business?â
This is a question that often comes up when small business owners start thinking about exit plans â especially when thereâs no one to take over. But you might be surprised by how many people could be interested. For example:đš A listed company thatâs promised shareholders theyâll grow 10% every yearđš An investor or business…
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đĄ How do you value a company?
Not every company can be valued the same way. It depends on: Here are 3 common approaches used in real-world valuation work : 1ď¸âŁ Book Value / Adjusted Book ValueBest for companies that own assets but arenât really operating. Think of land banks, or businesses winding down. If there’s no cash flow, we look at…
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What if the founders donât want the same ending?
Itâs common:One founder wants to keep growing the company.The other wants to exit and cash out. At first, everyone shared the same vision.But after operating for a whileâand especially when the business is profitable and the future looks brightâdifferent goals start to emerge. This is where things can get complicated. đĄ To ensure fairness, the…
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5 financial ratios we often check to understand a company better
Ratios give us a clearer viewâhow strong, risky, and sustainable the business really is. Here are 5 ratio categories we commonly analyze: These ratios help us tell if the companyâs performance makes senseâor if somethingâs hiding beneath the surface. Want to know what these ratios say about your business? Letâs talk.đĄ ORNA â Clear, independent…
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đ´ 5 Red Flags in a Company
1. High Profit, No Cash𧞠Profit looks great, but the cash flow is missing. Could mean aggressive revenue recognition, poor collections, or rising receivables. 2. Misuse of fund â e.g. Large Loans to Directors or Related Partiesđ¸ Money going out… but not to grow the business. This could be a sign of poor governance or…
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When should you value a company using book value instead of future cash flow?
Not every business has a clear growth story.Sometimes, the value lies in what it already owns. â Loss-making companies â no profits, but still have assetsâ Distressed businesses â when youâre thinking about liquidationâ Asset-heavy companies â factories, real estate, etc. In these cases, book value gives you a better picture than DCF or P/E.…
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𩺠Who needs a valuation report?
Both sellers and buyers. For sellers, itâs not just about putting a price tag on your company.Itâs a full health check-up. â Are your projections realistic?â Are your costs in control?â Is your growth story believable? Sometimes the value isn’t the surprise â the insights are. For buyers, you donât want to overpay.A good valuation…
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