Financial Modeling & Data Analytics

You’re ready to retire and you have desires of selling your business but don’t know what it's worth. You may have also received proposals for a buy-out but can’t decide whether it’s a fair price. Terms such as Goodwill, Future Earnings, Discounted Cash Flows, Book Value etc. come up frequently and you can’t decide how it relates to you or your business. All of this can be confusing!

Don’t worry, we can help! Contact us today.

With our collaborative approach to Financial Modeling & Business Valuation, we assist clients to determine valuation pricing (whether fair market value, replacement cost, book-value or liquidation value amongst others). A business valuation determines the economic value of a business or business segment and may be used in Mergers & Acquisitions, Take-overs, Sale, establishing Shareholders’ or Partners’ Ownership Interest, Taxation and even Divorce Proceedings.

Business valuation approach

There are three fundamental ways to measure the value of a business. Under each approach, several methods are available which can be used to determine the value. Each business valuation method uses a specific procedure to calculate the business value.

Asset approach

The asset approach to business valuation considers the underlying business assets to estimate the value of the overall business. This approach relies upon the economic principle of substitution and seeks to estimate the costs of re-creating a business of equal economic utility. The business valuation methods under the asset approach include: asset accumulation method and capitalized excess earnings method.

Market approach

Under the market approach to business valuation, one consults the market place for indications of business value. Most commonly, sales of similar businesses are studied to collect comparative evidence that can be used to estimate the value of the subject business. This approach uses the economic principle of competition which seeks to estimate the value of a business in comparison to similar businesses whose value has recently been established by the market. The business valuation methods under the market approach are the comparative private company transaction method and the comparative publicly-traded company transaction method.

Income approach

The income approach to business valuation uses the economic principle of expectation to determine the value of the business. To do so, one estimates the future returns the business owners can expect to receive from the subject business. The methods of business valuation under the income approach are the discounted cash flow method, the multiple discretionary earnings methods and the capitalization of earnings method.

Financial modeling

Step 5 - Strategy planning

Financial modelling may be useful in other areas of your business as well. By definition, financial modeling is the task of building an abstract representation (i.e., a model) of a real-world financial situation. This can be most useful in strategic-planning and for preparing and testing forward-looking assumptions and conducting sensitivity analysis. It can aid management in taking critical, better informed and timed decisions that may impact the business operation. Financial modeling may also be used for performing financial analysis whether inside or outside of the business and may guide decision making on the following:

Raising capital (whether debt or equity)
Making acquisitions (business or assets)
Pursuing business growth and growth opportunities
Selling or divesting business assets
Acquiring business assets
Tax management and planning
Budgeting and forecasting (whether short or long-term)
Capital allocation (i.e., the priority of project funding)
Financial statement and ratio analysis
Management accounting
Inventory costing and pricing methodologies.