Business valuation as the term suggests provides the business owner with several facts and figures regarding the actual worth or value of the company in the market in terms of asset value, income values, and competition. Actually, it becomes imperative for the business owners to have all this information. Various business deals of business entities
either wholly owned or partially as being taking place nowadays, so, the business valuation in Dubai has gained remarkable importance. Usually, the valuation is done by experts of the accounting services in UAE for estimating the intrinsic value of the business. The professionals of the auditing companies in Dubai make sure to provide cent percent dependable reports that will make it easy for you to take a quick and profitable decision. Knowing the value of your business can help you in making important decisions. So it’s time to give a start.
Why valuation is important?
It is not just about scrutinizing all the departments of the company including finance, but the owner has to analyze where exactly the company’s value lies. Business valuation is a technical work, which requires a lot of financial knowledge. The accounting firms in Dubai will make you discuss in depth about the details of the company’s business model, its strategies, and the outside market. The business valuation helps in determining the economic value of a business, asset or company. More or less, it needs to be valued if it is being bought, sold, or liquidated. If you want to sell your company, the account consultancy services can help in advising a strict valuation to raise a good negotiation with the buyers. On the other hand, the buyers will make their valuation too.
You can take the advice of an accounting company in Dubai for the purpose that will take into account all the financial statements, cash flow models, and market analysis.
The following details can summarize the point more precisely:
• The valuation will enable us to forecast the true profitability of the company
• The audit firms in Dubai will help you examine the operations of the company for better decision making and this would further help in increasing the profitability of the business in the long run.
• The evaluation gives an understanding at the present time so that you can decide whether to sell your business immediately or hold and nurture your company for future sale. It will make you understand the current scenario clearly which will save both time and money. With the help of accounting firms in Dubai, you can then analyze where more effort is required to develop your company and which part has turned out to be a bad investment.
• If in case, it is a partnership concern and the partner want to get separate, then an independent business valuation is important to be conducted. Many of the auditing companies in Dubai can advise on the same.
• Valuation becomes a primary step during mergers and acquisitions when you are bringing an investor in the company. The auditors in Dubai will be of great help. An investor will also be able to decide if investing in a company would be profitable for them.
• In the case of ESOP- ESOP is the Employee Stock Ownership Plan. Under the plan, the company provides the employees with ownership of the company. Generally, the shares of ESOP are valued annually to measure the productivity of the company.
• In case if any negotiation is going on with the banks or investors, then the valuation report proves to be of utmost help. A business valuation will increase your credibility with the banks and the process also gets speed up. Under the expertise of auditors in Dubai, you have all knowledge about your company’s worth, which provides a positive impact on the financial institutions and that will help you in getting easy loan from the market.
• In case, if you are involved in any type of court case, then the damages should be based on the worth of the company instead of any of the estimated figures. A proper evaluation as advised by the accounting services in Dubai will surely strengthen the case.
• The valuation becomes helpful in the case of gift tax planning such as when transferring an interest to the family members or donation to a charity and so on.
• Valuation becomes a guide for investors who are showing interest in buying running businesses
Three Business Valuation Methods
For the valuation of the business in Dubai, any of the below-mentioned methods can be used through the expertise and guidance of professionals in accounting services in UAE
- Asset approach- this method estimates the value of a business as the sum total of the costs required to create another business of equal economic utility. The asset-based method becomes useful for accurate business purchase price allocation. You are finding the market values of business assets and liabilities and the difference is the business value. This is generally considered in the case of liquidation. Under this approach, either, the advisors of the accounting service in Dubai would advise to list the business net balance sheet value of the assets of the business and subtract the value of its liabilities or you determine the net cash that would be received if all assets were sold and liabilities were paid off.
- Market approach- these methods estimate the business value by comparing to the recent selling prices of similar businesses. So, this approach uses the principle of competition. However, this becomes challenging for sole proprietors as it is difficult to find comparative data and works well where there are a sufficient number of similar businesses to compare.
- Income approach- as the name implies, this approach estimates the business value based on its income-producing capacity and risk. Firstly the future returns from the business are estimated and then compared against the associated risk. But what is a good return ultimately depends on the market, which is why business valuation is so subjective.
Choosing an expert for valuation
All the business valuations are not the same. Hence the valuation experts are required to be competent enough, conversant with all the guidelines and independent for the valuation to be credible. The professionals under the audit firms in Dubai have the expertise and experience to perform the task in an easy going way. Apart from determining the worth of assets, future earnings and market conditions, the accounting company in Dubai will also make a thorough examination of all the entities’ documents. The opinion and advice of the experts play an important role in making these assessments and determinations. Some of the points which we can consider while hiring the audit firms in Dubai are explained below:
• Experience: the valuation has always been a complex task. The professionals in the accounting services in UAE should have the expertise to understand each of these approaches and formulas and then only can determine which will yield the type of results the management is looking for.
• Conduct the Visit: The expert should regularly make a visit at the site as this will help in physically observing and assessing the subject undervaluation and then can substantiate the findings with the information received from the key executives of the company as well as from the financial records.
• In-Depth Knowledge about the company: an expert from the audit firms in Dubai will make sure to know all the intricate details about the company and its undertakings, about any expansions or new products being added, to get a clear perspective of how these additions are relative to the company and the market.
• Certified Valuation Specialist: the professionals under the accounting consultancy services are qualified, trained and certified for the valuation process and also participate in continuing training programs offered by the accreditation organizations
• Business Diversities: no two businesses are likely to be the same. Hence the professionals in the accounting company in Dubai will encounter different scenarios that need to be assessed in each valuation. Methods are accessible but they have to be selected depending on the circumstances and opinion
• The auditors in Dubai should be compliant with the international financial reporting system and makes sure to provide custom solutions according to your business needs.
One can summarize from above that business valuation is very beneficial to the company. However, it can prove to be a complicated process. Therefore, the businesses can take the help of various audit firms in UAE, who have highly qualified professionals that can deliver a range of services relating to auditing, registration, financial planning, etc. If the business owners would like to seek only some low-cost business valuation, then they would surely miss out on the important benefits which can be received from a comprehensive valuation analysis and valuation report performed by audit firms in Dubai.
The auditors in Dubai are expert in business valuation and are happy to offer the best services for most competitive prices. Each valuation method as explained above is being used to determine a fair price for your business. There are various audit firms in Sharjah and audit firms in Abu Dhabi where the best experts will help you at every stage of the valuation process!