Business Valuation

The process of valuation of a company is not a simple process, but it is not complex either. It is always necessary to consider there exist two parts, of which the buyer always will think that the company is “expensive” and the sale part who thinks the opposite.

Under both points of view, the main thing is the cash flow that the business generates. Flows of money are the ones that let to a company subsist and grow! The sale part overvalues his company by diverse reasons, generally:

• Emotional: Whenever one creates something, this it happens to be like a son. More if it has been the monetary support for the family.

• Mark: A company that has a powerful mark does not mean that its company is worth millions. Since without cash flow of money and investments, it is impossible that mark generates money.

• Actives: The involved machines and machineries are depreciated generally by obsolescence or countable depreciation. Although these are fundamental part of the company, not always they are most important.

• What people say: Often the clients, relatives, competitors, friendly, etc. Tend to give “information” or aid for the company. Remember that they only give “ideas”, are not presents in the day to day and they have not contributed with money, effort and sacrifice to take the business ahead. Although the commentaries are good, not always they give to the best advice and the best visions for the company.

• History: History is the pretty part of the company, is the past. What matters is the present and like drawing for the future.