Company Valuation
Case Study: Company Valuation and Fundraising by Client
- Private Company
- Income Approach
Introduction
A company seeking to raise funds for business expansion and operational improvements approached MYVALUATION for professional valuation services. The company’s management required a thorough valuation to determine the fair value of the business, which would serve as the basis for fundraising efforts.
Initial Consultation and Understanding the Requirement
To kickstart the process, MYVALUATION arranged discussions with the company's management to:
- Understand the financial and operational position of the company.
- Determine the required funding amount and the purpose behind fundraising.
- Review the latest audit reports and charter documents to assess the company’s financial health.
During these discussions, it was identified that the company, although actively operating and expand more in future, Also not a publicly listed entity. This limited the applicability of valuation methods such as the Asset Approach and Market Approach. Instead, MYVALUATION decided to adopt the Income Approach, which focuses on future cash flow projections and the company’s anticipated growth.
- Valuation Methodology and Proposal
Since the Income Approach relies on future financial performance, MYVALUATION worked closely with the management to prepare realistic and reliable cash flow projections. Given the company’s business model and the complexity of its transactions, MYVALUATION formulated a tailored valuation strategy and shared a detailed proposal with the management. Upon review, the management approved the proposal, and a formal meeting was scheduled to discuss:
- Further data requirements for the valuation process.
- Projection assumptions and financial modeling.
An engagement letter outlining the scope, methodology, and commercial terms was shared with the company. Upon receiving the signed engagement letter and 50% of the professional fees, the valuation assignment was officially initiated.
- Execution and Completion of Valuation
MYVALUATION conducted a thorough valuation analysis based on the agreed methodology. Upon completion, a draft valuation report was shared with the management for review.
After receiving confirmation and feedback on the draft report, the following final steps were taken:
- The management provided a Management Representation Letter (MRL) as an annexure to the final report.
- The company settled the remaining balance of professional fees.
- The final valuation report was issued to the company.
- Outcome
With the final valuation report, the company successfully raised the required funds to expand its business and improve operations. The entire valuation process was completed within 7 to 8 working days, ensuring efficiency and accuracy.
Conclusion
MYVALUATION's strategic approach, in-depth financial analysis, and close collaboration with management enabled the company to achieve its fundraising objectives effectively. By leveraging the Income Approach, MYVALUATION provided a comprehensive and reliable valuation that facilitated a successful investment process.