Business Valuation is the process of determining the economic value of a business or company.

1. BUSINESS VALUATION

2. What is business valuation
The process of determining the economic value of a business or company.
Business valuation can be used to determine the fair value of a business for a variety
of reasons, including sale value, establishing partner ownership and divorce
proceedings. Often times, owners will turn to professional business valuators for an
objective estimate of the business value.

3. Components of Business Value
 Shareholder Value
 Customer Value
 Employee knowledge
 Channel Partner Value
 Supplier Value
 Managerial Value
 Societal Value

4. For a publicly traded company, shareholder value is the part of its capitalization that is equity as opposed to long-term
debt. In the case of only one type of stock, this would roughly be the number of outstanding shares times current share
price. Things like dividends augment shareholder value while issuing of shares (stock options) lower it. This shareholder
value added should be compared to average/required increase in value, also known as cost of capital.
For a privately held company, the value of the firm after debt must be estimated using one of several valuation methods, s.a.
discounted cash flow or others.
Shareholder Value

5. Customer value is the value received by the end-customer of a product or service. End-customer can include a single
individual (consumer) or an organization with various individuals playing different roles in the buying/consumption
processes. Customer value is conceived variously as utility, quality, benefits, and customer satisfaction.
Customer Value

6. This is often an undervalued asset in companies and also the area where there is the most discord in reporting. Employees
are the most valuable asset companies possess and the one we expect the most from, but often the one that receives the
short end of the stick when it comes to values applied to them.
Employee knowledge

7. The value a business underpins on partner relationships in the business. Partner value here stresses that it can be critical
to a firms functioning. It ceases to exist or carry out business activities if partner value is diminished or lost.
Channel Partner Value

8. Follow the people-oriented principle; Follow the principle of system value; Follow the liability principle of value;
Managerial Value

9. The social environment also wants that the firm follows or adopts several values towards the society. These social values
relate to the provision of hospitals, charity, schools, parks, wildlife protection etc.
Societal Value

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Business Valuation