Company valuation

What is a company worth? And what aspects have to be taken into account in order to calculate a realistic purchase or sale price? This issue of purchase price calculation lies at the very centre of a corporate transition – and frequently gives rise to debates.

This is because, while the potential buyer would like to pay the lowest possible price, the seller tends to overestimate the value of his company. To prevent negotiations being doomed to failure from the very start, an outside consultant should be brought in.

Real Treuhand has for many years specialised in value determination when companies are bought and sold. Our experienced consultants help you to calculate a realistic price acceptable to both sides and to close the deal successfully.

Value calculation for the Mittelstand

In the case of publicly traded companies, company value is predominantly determined by the current share price. Value calculation for non-publicly traded companies is, however, much more complex because in this case there is no objective company value.

For a factually oriented fair market company value we deploy – depending on the situation – different theoretical financial models such as:

  • Income value method
  • Discounted cash flow method
  • Multiplier method

But even with the aid of such theoretical approaches only an approximation of real market value is possible. Market value is basically determined by what serious potential buyers are willing to pay for a company.

Relevant factors impacting on value

Besides hard facts that emerge from current key business figures, other key parameters may be relevant when a company is being evaluated, such as

  • Company size and development
  • Management structure
  • Workforce structure
  • Location
  • Product portfolio
  • Customer and supplier relations
  • Market position
  • Sector trends
  • Growth forecasts
  • Innovative force
  • and many others

process flowchart