What is valuation? In finance, valuation can simply be defined as estimating the value of an asset or liabilities.

However, business valuation means determining the accurate worth/value of a company or its part or component.

Why Business valuation is Necessary?

Calculating the present value or worth of a company is done for different purposes like acquisition, sale/buy, separation, taxes and exhibitions.

Importance of Business Valuation

As we have stated above the purposes for which business valuation is done of a company, it becomes an important consideration whenever finance related step has to be taken. Business valuation services help companies know their worth, present their accurate value forward.

• Business Selling or Buying

It is simple to understand that when you are buying or selling a business both parties have to have the clear picture of the company’s worth. While market shares of the company is the first thing that is taken into account, but that is one thing that can be termed volatile. Thereby, business valuation becomes extremely important.

• Investments

When investors are looking to buy a company’s shares they want to know the true value of the business. This is important for potential investors as well as present shareholders.

• Asset Valuation

Asset valuation helps the company to get a clear picture of the company’s assets, liabilities, indulge in investments, and also have a clear idea about the asset lifespan.

• Litigation or Dissolution

If the company is going through dissolution or is in a divorce or separation process, then it becomes important to present the company’s accurate valuation in the court of law. It also becomes important or future strategies regarding investments.

• Loans

If you are looking for business loan or borrowing for whatever reason related to your business, you need to present the accurate valuation of the company. It makes the process quick, enhances approval chance and also helps the lender to determine how much loan you can be granted.

Conclusion:

Business valuation is important, at various stages of a business’s lifecycle. Always ensure that for this purpose you are working with a professional name in business valuation. When you want to make profitable and informed choices related to investments, it will help to get professional advice from an investment broker in India.