What is the Value of My Company?
What’s The Value of My Company? And what do I expect to get for my company?
These are the most asked questions our IMAP M&A advisors hear when people begin talking about selling their company.
In the first video in our new "IMAP M&A ACADEMY" series, Jurgis V. Oniunas, IMAP Chairman & Managing Partner at @IMAP SEE, explains IMAP’s process for determining the market value of your company.
Determining the value of a company is essentially broken down into three tasks:
- Theoretical Analysis
- Company Value Drivers
- Buyer Segmentation
Theoretical Analysis: There are three key ways used by Investment bankers to value your company:
- Looking at comparative transactions in the market
- Looking at stock market evaluations
- Using DCF models
We also look at a fourth element - Owner’s expectations.
All of these will provide us with a valuation range and move onto task two.
Company Value Drivers: At this point we take a deep dive into the value drivers of your company using a SWOT Analysis to determine the company’s Strengths, Weaknesses, Values, and Threats.
Every company will have value drivers that are important to them, but here just a few as examples:
- Market
- Technology
- Financials (ROC)
- Management
Buyer Segmentation: The previous steps will have provided us with a range of evaluations, which we will now use when evaluating all the buyers potentially interested in acquiring your company, such as Strategics (Trade), Financials (PE and Family Offices, each of which could also include strategics).
Each buyer will have its own motivation for buying the company, and each motivation has its own value, so it is critical we identify them. These motivations can include:
- Synergies
- Market consolidation
- Capacity
- Cash flow
We then plot these motivations, as well as our previously calculated range of valuations on a Supply-Demand curve; X = price companies willing to pay, and Y = Scarcity.
All the information gathered in the previous three tasks can then be used in negotiations in order for IMAP to secure the best price for our clients’ company.
IMAP Chairman & Managing Partner IMAP SEE