Valuations may be conducted for a variety of reasons, such as Selling or buying the company, Partnership dissolution, Legal disputes, or Succession planning

1. Business Valuation in the age of
COVID-19
It is said that valuing businesses is both a science and an art.
A perfect amalgamation of both, business valuation, relies on scientific
evidence & methods and qualitative artful considerations. But why do we need
to value our business? Is the purpose of business valuation a simple profit
and loss snapshot? Not really; business valuation can be seen as more of a
health check that gives us an insight into the strengths and weaknesses of a
business and what we are worth; and not what we want.
More so with all the events caused by COVID19, company valuations are
becoming a critical area of consideration. Valuations may be conducted for a
variety of reasons, such as Selling or buying the company, Partnership
dissolution, Legal disputes, or Succession planning
In any of these cases, the owner should have a thorough understanding of
cash flow, growth, margins, assets, liabilities, and intellectual property.
Fundamentally, the major factors that help in determining the value of your
business are;
 Historical financial performance
The financial performance of your company in recent years that includes profit
and loss statements, balance sheets, and tax returns is a significant
parameter that investors consider in a business valuation. Trends in revenue
and expenses are a basis on which investors assess potential and hence
value the company. There are, of course, companies – usually in the “new”
businesses like technology and high growth sectors that do need to be valued

2. without a historical track record, and that is where the next factor plays a role
i.e., – the future growth potential
 Future growth potential
While present and past statistics are important in determining value, equally
important is the future growth potential of your company. Investors need to
know the expected growth of the business and the chances of expanding the
business’ product/ service line in the future. Here, the assumptions behind the
numbers that generate enterprise value play a very critical role. The valuer will
have to get even deeper into the business, understand the industry, its risks,
and value drivers even more closely to arrive at a meaningful result.
 People
An organization’s success or failure is determined by the people that run it. A
company cannot be valued without considering the roles and impacts that its
key people make. Unfortunately, this is a silent and understated factor in most
valuations, but it is possibly one of the most critical ones.
There are of course, several other factors such as:
 Customer base: A diversified customer base v/s reliance on a few clients
 Risks Factors: Country, Industry, Markets of operation
 Capital Structure: Debt v/s Equity
As mentioned earlier, business valuations have always been challenging and
tricky and now the current pandemic crisis has added a layer of uncertainty to
the whole process. While calculating the true value of a company, investors
make assessments on future economic benefits based on past performances
and supported projections. But, in the current scenario, it is hard to make
assumptions and arrive at a fair value. A range of valuations or valuation
reports that cover assumptions made in COVID-19 and non-COVID-19
scenarios will have to be provided. It is in conjunction with this that valuation

3. methodologies, such as discounted cash flow valuations or valuations based
on earnings or asset bases can be used.
While certain businesses and sectors are experiencing significant declines in
market capitalization, there are others that are not just surviving, but thriving.
Tourism, Hospitality, and traditional offline retail are some of the most
negatively affected markets that are struggling to adapt. There has been a
dramatic shift in the shopping pattern of customers. In the pre-Covid days,
customers were happy to spent hours checking retail stores; but now they find
shopping via e-commerce sites more convenient and safe. Many such stores
were forced to shut down temporarily or sell their business.
Companies that were facing fundamental problems prior to the pandemic will
have a tough time to cope with the situation, whereas companies that had
proper business continuity and crisis plans will be in a position to take
advantage of the new scenario.
Many buyers are ready to buy businesses that have been temporarily
shuttered due to the pandemic, provided it has the potential. On the seller’s
side, it is better to sell their business at its current valuation, rather than
draining off their personal assets in an attempt to save their company.
However, it is mandatory to figure out a deal that works for both parties.
A good business valuation team will assist in coming up with flexible deal
structures with a reasonable and satisfactory price for the seller and the
buyer. HLB HAMT, as a business valuation company has a team that helps
companies and investors in Dubai, Abu Dhabi, and other emirates in the UAE
in determining the enterprise value and supporting them through the
transaction. If you are the owner of a company in the UAE and would like to
do a valuation on it or if you are looking to invest in attractive businesses in
the UAE but need to do a valuation of your target company, our team will
guide you. The team lays emphasis on understanding the business model and

4. works together with the client management team to validate their strategic
business plans as well as the key assumptions and risks involved. This will
ensure that the valuation which is arrived is realistic and acceptable to any
interested third party.
HLB HAMT covers sectors that include retail, financial services, technology,
real estate, hospitality, manufacturing, healthcare, food & beverage,
automotive, and many more.
Get Free Consultation
Business Valuation in the age of
COVID-19
Level 18, City Tower-2,
Sheikh Zayed Road
PO Box 32665
Dubai – United Arab Emirates. Tel: +971 4 327 7775
E-mail: dubai@hlbhamt.com
www.hlbhamt.com