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Company value

While researching "business valuation" or "company value calculation" on the Internet you will find a broad variety of results. After an initial review of the results two questions will arise:

1. Who can calculate my company's value?

2. Which methods to calculate the company value are recognized internationally, relevant to my industry and are being applied regularly in the daily practice of business valuation?

After studying the relevant literature on corporate valuation and equipped with mathematical knowledge, one is able – with a little practice – to calculate the value of his company by himself. This statement is true at least whenever you are familiar with accounting issues and can spare enough time.

Another option is to mandate auditors and tax consultants, who calculate the company's value e.g. in accordance with the Institute of German Auditors’ (IDW) accredited method. A so called objective value of the company is being calculated.

Corporate finance or M&A consultants also calculate the company’s value. This advisory group also calculates the value of the company e.g. according to the Institute of German Auditors’ (IDW) accredited method. These methods and their applications are described in detail in the document IDW S1. Corporate finance and M&A consultants usually provide additional assessments based on a comparable company approach. In addition to the application of the comparable company approach, the consultants usually provide a detailed analysis of the company and the market environment in order to verify the forecast figures and to adjust them if necessary. In area of company valuation consultants especially commit themselves to assess the company’s strengths, weaknesses, opportunities and threats. With the comparable company approach a so called subjective company value is being calculated.