Business valuation is important for every Business. A business need to understand his business worth in each and every year. It helps him to identify his business's position. Here i talk about the business valuation and the process of how to calculate your business worth.
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Business valuation and Financial Plan
1. Business
Valuation
Mohammad Anishur Rahman (MBA, ACA)
Business and Financial Advisor
PlanforStartup.com Mail: a c c r u o n @ g m a i l . c o m ,
+8801515265698
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O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
2. w w w. p l a n f o r s t a r t u p . c o m , M a i l : a c c r u o n @ g m a i l . c o m P h o n e : + 8 8 0 1 5 1 5 2 6 5 6 9 8
O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
3. Introduction
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O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
A business valuation is a general
process of determining the economic
value of a whole business or company
unit.
4. w w w. p l a n f o r s t a r t u p . c o m , M a i l : a c c r u o n @ g m a i l . c o m P h o n e : + 8 8 0 1 5 1 5 2 6 5 6 9 8
O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
Steps to
establish
your
business
worth
Step 1: Planning and preparation
Step 2: Adjusting the historical financial
statements
Step 3: Choosing the business valuation
methods
Step 4: Number crunching: applying the
selected business valuation methods
Step 5: Reaching the business value
conclusion
5. Why do You need Business Valuation?
2.Understand
Potential for
Growth
3.Plan Your
Retirement
4.Ensure Proper
Protection of
Your Asset
5.Develop a
Succession or
Sale Plan
6.For Buy-Sell
Agreements
With Partners
1.Understand
Your Current
Business
7.To Work With
Lenders
8.Trust/Estate
Planning
9.Strategize for
Future
Acquisitions
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O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
6. Valuation Method
Times
Revenue
Method
Earnings
Multiplier
Discounted
Cash Flow
(DCF) Method
Asset-Based
Valuation
Method
Book Value
Liquidation
Value
Market
Capitalization
w w w. p l a n f o r s t a r t u p . c o m , M a i l : a c c r u o n @ g m a i l . c o m P h o n e : + 8 8 0 1 5 1 5 2 6 5 6 9 8
O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
7. Why do You need Business Valuation?
2.Most Reliable
Method is DCF
Method
w w w. p l a n f o r s t a r t u p . c o m , M a i l : a c c r u o n @ g m a i l . c o m P h o n e : + 8 8 0 1 5 1 5 2 6 5 6 9 8
O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
8. Discounted
Cash Flow
Method
w w w. p l a n f o r s t a r t u p . c o m , M a i l : a c c r u o n @ g m a i l . c o m P h o n e : + 8 8 0 1 5 1 5 2 6 5 6 9 8
O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
9. Discounted Cash Flow Method
2.Forecasting
unlevered free cash
flows
Calculating terminal
value
Discounting the cash
flows to the present at
the weighted average
cost of capital
Add the value of non-
operating assets to the
present value of
unlevered free cash
flows
Subtract debt and
other non-equity
claims
Divide the equity value
by the shares
outstanding
w w w. p l a n f o r s t a r t u p . c o m , M a i l : a c c r u o n @ g m a i l . c o m P h o n e : + 8 8 0 1 5 1 5 2 6 5 6 9 8
O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
10. Formulas used to Calculate Discounted Cash Flow
Method
FCF = EBIT x (1- tax rate) + D&A + NWC â Capital expenditures
Calculating the terminal value
TV = (FCFn x (1 + g)) / (WACC â g)
WACC=(VEĂRe)+(VDĂRdĂ(1âTc))
P=râgD1ââ
ERiâ=Rfâ+βiâ(ERmââRfâ)
11. Estimate & Assumption
Tax Rate
Risk Free rate
Market Index
Beta of the company or similar company
Future Assumptionsââ
12. Elements of DCF method
2.EBIT = Earnings before interest and taxes. This represents a companyâs GAAP-
based operating profit.
â˘Tax rate = The tax rate the company is expected to face. When forecasting taxes,
we usually use a companyâs historical effective tax rate.
â˘D&A = depreciation and amortization.
â˘NWC = Annual changes in net working capital. Increases in NWC are cash
outflows while decreases are cash inflows.
â˘Capital expenditures represent cash investments the company must make in
order to sustain the forecast growth of the business.
w w w. p l a n f o r s t a r t u p . c o m , M a i l : a c c r u o n @ g m a i l . c o m P h o n e : + 8 8 0 1 5 1 5 2 6 5 6 9 8
O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
13. Pros Cons of DCF Method
2.Pros of a DCF model are:
â˘Extremely detailed
â˘Includes all major assumptions about the business
â˘Determines the âintrinsicâ value of a business
â˘Does not require any comparable companies
â˘Can be performed in Excel
â˘Includes all future expectations about a business
â˘Suitable for analyzing mergers and acquisition
â˘Can be used to calculate the internal rate of return IRR of an investment
â˘Scenarios can be built-in
â˘Allows for sensitivity analysis
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O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
14. Cons Cons of DCF Method
2.Cons of a DCF model are:
â˘Requires a large number of assumptions
â˘Prone to errors
â˘Prone to overcomplexity
â˘Very sensitive to changes in assumptions
â˘A high level of detail may result in overconfidence
â˘Looks at company valuation in isolation
â˘Doesnât look at relative valuations of competitors
â˘Terminal value is hard to estimate and represents a large portion of the total value
â˘Challenging to estimate the Weighted Average Cost of Capital (WACC)
w w w. p l a n f o r s t a r t u p . c o m , M a i l : a c c r u o n @ g m a i l . c o m P h o n e : + 8 8 0 1 5 1 5 2 6 5 6 9 8
O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
15.
16. We will Calculate the DCF
based on Financial
Forecast
w w w. p l a n f o r s t a r t u p . c o m , M a i l : a c c r u o n @ g m a i l . c o m P h o n e : + 8 8 0 1 5 1 5 2 6 5 6 9 8
O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
17. Financial Plan and Forecast
ďź Startup Expenses
ďź Sales Projections
ďź Payroll Sheet
ďź 3/5 Years Monthly Cost Estimation
ďź 3/5 Years Break Even Analysis
ďź 3/5 Years Financial Ratio Analysis
ďź 3/5 Years Profit & loss Statement
ďź 3/5 Years Cash flow Projections
ďź 3/5 Years Balance Sheet
ďź Ratio Analysis
w w w. p l a n f o r s t a r t u p . c o m , M a i l : a c c r u o n @ g m a i l . c o m P h o n e : + 8 8 0 1 5 1 5 2 6 5 6 9 8
O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
31. Sample Business Plan
Here is a Sample Business Plan that I have prepared for one of my clients who is looking for $2 Million
32. Industry I worked with
o Transport Industry
o Accommodation Industry
o Ambulatory Health Care Services
o Arts, Entertainment, and
Recreation
o Beverage and Tobacco Product
Manufacturing
o Building Material, Garden
Equipment and Supplies Dealers
o Clothing and Clothing Accessories
Stores
o Food Manufacturing
o Furniture and Related Product
Manufacturing
o Health and Personal Care Stores
o Mining, Quarrying, and Oil and
Gas Extraction
o Motor Vehicle and Parts Dealers
o Nursing and Residential Care
Facilities
o Personal and Laundry Services
o Plastics and Rubber Products
Manufacturing
o Professional and Business
Services
o Real Estate, Rental and Leasing
o Warehousing and Storage
o Waste Management and
Remediation Services
o Wholesale Trade
o Chemical Industry
o Computer Industry
o Agriculture industry
o Construction Industry
o Education Industry
o Pharmaceutical Industry
o Health care Industry
o Hospitality Industry
o Entertainment Industry
o News Media Industry
o Energy Industry
o Manufacturing Industry
o Music Industry
o Electronics Industry
o Retail Industry
o Fashion Industry
o SAAS, APP Industry
o Robotics
o Travel & Tourism Industry
o Restaurant Industry
o e-commerce Industry
o Personal Service Industry
o Finance Industry
o Relationship App, Site
o Motion Picture and Sound
Recording Industries
o Professional, Scientific, and
Technical Services
33. Testimonial
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O r d e r Yo u r B u s i n e s s Va l u a t i o n R e p o r t : w w w. f i v e r r. c o m / b u s i n e s s f i x x x
34. Thank You
For More Details
My Blog: www.planforstartup.com
E-Mail: accruon@gmail.com
Whatsapp: +88015-15265698
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