Valuation methods in finance determine the fair value of businesses for purposes such as sales, taxation, and mergers. Key methods include discounted cash flow, comparable company analysis, and precedent transactions, which collectively aid in making informed financial decisions and improving company worth. Accurate valuations are essential for business growth, stability, and effective negotiations.

1. Valuation Methods In Finance
Presented by: IIM SKILLS
Category: Financial
Modeling, Knowledge

2. Introduction
"Valuation methods in finance determine the fair
value for various purposes like selling, taxation, or
divorce proceedings.”
"During the valuation process, all components of a
business are reviewed to determine the overall
worth of the organization."
"Estimates are both an art and a science, using
formal methods for accuracy."
"A business valuation, often known as a company
valuation, assesses the economic worth of a
company."

3. Importance of
Business
Valuation
"Helps in making informed decisions for
selling or merging companies."
"Useful for resolving disputes in
taxation, divorce, or shareholder
deadlocks."
"Assists in determining partner
ownership and attracting investors."
"Provides a basis for financial planning
and improving company worth."

4. Key Valuation Methods
1. Discounted Cash
Flow (DCF)
2.Comparable
Company
Analysis (CCA)
3.Precedent
Transactions

5. Discounted Cash
Flow (DCF)
Estimates value based on
future cash flows discounted to
present value.
Suitable for companies with
stable and predictable cash
flows.

6. Comparable
Company
Analysis (CCA)
Compares target
company with similar
companies using metrics
like P/E ratio,
EV/EBITDA, etc.
Helps in
understanding market
value based on peer
performance.

7. Precedent Transactions
Provides insights into historical
acquisition prices to reflect real
market conditions.
Analyzes past transactions of similar
companies.

8. Application and
Benefits
Valuation methods guide strategic
decisions in mergers, acquisitions, and
investments.
Essential for financial planning, attracting
investors, and ensuring fair negotiations.

9. Accurate valuations are crucial for business growth and stability.
Combining different valuation methods offers a comprehensive approach
to understanding a company's worth.
Reference: For more information, visit IIMSKILLS Valuation Methods in
Finance.
Conclusion

10. Thank you
very
much!