Business Valuation Services in UAE

Valuation of Business

Business Valuation is the process of determining the current value of a business, taking into consideration various factors like assets, liabilities, income, management and the location that the company holds. 

Determining the value is essential for the company as well as for its stakeholders as it can help you in making important decisions. It requires a high-level financial analysis that is to be conducted by a qualified valuation professional with the appropriate authorizations. 

Basically, a company is priced on the basis of its market value. Wide-Ranging valuation analysis and the valuation report done by a valuation professional will ascertain significant benefits, which may be lost if the business owner goes for a low-cost valuation. These benefits help business owners get a better price, or reduce the financial risk of the management in litigation or other events.

Business Valuation Approaches: –

To accomplish perfection business valuation services, HayyaTax adopts effective tools and strategies. The various approaches we adopt for business valuation in Dubai are mentioned below:

• Asset-based valuation

The asset-based valuation considers the basic business assets in order to estimate the value of the overall business enterprise. This technique is good for corporations, but it will be challenging if applied to a sole proprietorship, because, since the assets belong to the same owner, it will be difficult to separate the same for personal use and business purposes. 

• Market-based valuation

Under the Market-based valuation, the marketplace is considered for the business value. It compares the value of one’s business to another similar business which is sold recently.

• Income-based valuation

The Income-based valuation method is based on the economic principle of expectation to determine the value of a business, i.e. the real value of a business lies in building wealth for the future. Based on this fact, an evaluator ascertains the upcoming cash flow by examining the records and also assesses the upcoming financial risk.

All these approaches may bring different estimates of value for the same asset at the same time. If you want to know the real estimate, you have to use all these approaches to reach a final conclusion.

How Business Valuation Process Helps your Business Grow?

Getting the right business valuation process can help your business grow in several ways achieving maximum profitability. 

• Improves the goodwill

Conducting a proper business valuation provides you with a clear picture of your business. It will help you increase the goodwill and assess the current value of your business according to the market environments.

• Provides an upper hand over other business

Getting the exact value of your business helps you to have an upper-hand over other business at the time of merger or acquisition.

• Attracts the investors

Business valuation shows the company’s value. A high value would eventually attract investors towards your business to a great extent and leverage the growth openings of your business.

• Help take long term decisions

The value of your business will act as a decision-making tool, and it will help you make long-term decisions concerning your business expansion.

• Helps company restructuring

The current valuation report provides the fundamental details of the company’s assets and liabilities. This will help you take the decision to restructure the company as and when required. 

• Helps to build trust

Your company’s high value will help you build trust in the minds of the financial institutions and it will be easy for you to get loans from the market for future expansion.

Various Situations that Lead to the Valuation of Businesses

A Businesses valuation is done based on various reasons, of which some of the common reasons are discussed below: –

• Funding or financing

An objective of your business will help you raise funds for your business while negotiating with banks.

• Goodwill impairment

Goodwill impairment happens when the purchase value is greater than its implied fair value. A goodwill valuation will help you understand the impairment loss of the business.

• Buy or sell contracts

A business valuation will make sure that you reach the right decision on whether to sell your business or grow your business through acquisition.

• Mergers or purchases

At the time of buying or merging with another company, a business valuation will help you determine if the price you have to pay is a fair one or not.

• Litigation and ownership disputes

If there is a court case against the value of the business, it will be settled by the court based on the valuation of the business.

• Shareholder oppression cases

An independent valuation of the business is required for a fair settlement of ownership issues once any one of the owners decides to quit.

• Reorganization and bankruptcies

A valuation report provides your company with certification that can assist with creditor negotiations and provide the basis for a financial restructuring plan at the time of bankruptcy.

• Business planning

Your company’s location is a major factor when it comes to valuation because if you are in a prime location, it can be a major advantage for your business.

Tools used in Business Valuation

The value of your business is driven by management, assets and liabilities, income, location, etc. HayyaTax adopts suitable tools and strategies to value your business to help you make informed decisions. Our various business valuation tools include:

1. Ratio analysis

Ratio analysis is the assessment of line items in the financial statements of a business. It includes GP Ratio, NP Ratio, ROI, Liquidity Ratio, etc.

2. Comparative financial ratio analysis

A comparative analysis allows company owners to compare their company’s financial ratio information with that of a challenging company.

3. Analysis of going concern concept

The going concern concept is the hypothesis that an entity will remain in business for the predictable future.

HayyaTax Business Valuation Services

Several actions and factors are to be considered in the execution of business valuation. The following are some of the general valuation procedures that we follow: – 

• Know the purpose of the action
• Review historical and forecasted information
• Analyse balance sheets, income statements and cash flow 
• Conduct meetings with management and discuss company history, operations, employees, customers and competitors and other relevant items
• Analyse and compare company performance to similar businesses within the industry 
• Assess the budgets, leases, sales contracts, purchase agreements, customer lists, local and national economies and management capabilities.
• Know the client and the client’s use of the valuation
• Fix the standard of value and its definition
• Determine whether discounts and premiums are to be considered
• Collect information about the industry and economy
• Check all approaches of value and select the most appropriate method
• Put into practice the approaches to value through the various methodologies
• Ensure compliance with professional standards, if pertinent
• Provide authentic and accurate reports for getting your financial decisions well-done.

Business Valuation process is not an easy task. When it comes to business valuation in Dubai, HayyaTax conducts an in-depth analysis to get a total understanding of the industry, the business risks, cash flow expectations, and many other situations. So, it is always advisable that the business valuation process must be done by a valuation expert. HayyaTax Business Valuation experts in Dubai can provide you with informed insights into the valuation process and help you to either sell the business for a worth price or take the right decision to invest in a worthy business.

HayyaTax services cover a wide range of business services that includes CFO Services, Accounting & Bookkeeping Services, Accounting Software services, Due Diligence Services, and Tax Filing & VAT Consultancy services, Audit Services in Dubai.

Any queries regarding business valuation in Dubai? Feel good to contact us. HayyaTax is there for your assistance! 

Our expert will give you one-hour Free Consultation to keep your reservations away!