In the company, evaluation is something quite everyday. Determining the value of its components (assets, liabilities, equity, etc.) is necessary for daily management.
In general, a company has different value to different buyers and to the seller. The value should not be confused with the price, which is the amount for which the seller and the buyer agree to carry out a transaction for the sale of a company. According to the buyer’s point of view, it is about determining to a certain extent the maximum value that they should be willing to pay for what the company to be acquired will provide them; From the seller’s point of view, it is about knowing what the minimum value at which he should accept the operation will be.
A company can also have different value for different buyers for different reasons: economies of scale, economies of complementarity, different perceptions about the sector and the company, etc.
Companies that are not subject to liquidation are valued in practice by applying the so-called dynamic methods. Its value is estimated under the premise of the company’s continued management, and, therefore, its capacity to generate results or future cash flows is considered.
Normally, the discounted free cash flow methodology is used to value all of the company’s shares.
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