An Auditor’s Guide on Why You Must Conduct a Business Valuation

Most business owners know their business from A to Z. However, many of them are unaware of the true value of their company in the market. Understanding your company’s real worth is critical for achieving goals and viably utilizing business resources, regardless of the specific situation. However, you will need the help of audit firms in Dubai to do the due diligence procedures to understand the true worth of your business.

A business valuation will help you in situations like selling your company, merger & acquisitions, attracting investments, planning succession etc. It is also necessary when onboarding a new partner/shareholder, marital dissolution disputes, estate planning, raising investment capital, determining capital gain etc. In the blog below, we will help you understand why it is important to determine the true value of your company at any given time. Keep reading for more information:

Get a Better Knowledge of Company Assets 

Business owners won’t be able to make informed decisions and set proper goals if they simply estimate their business assets. Conducting a business valuation with the help of audit firms in Dubai will enable you to understand our business assets and negotiate effectively with potential buyers. You can gain specific numbers from the valuation process, which will allow you to understand how much to reinvest into the company, and how much to sell your company for so that you can still make a profit.

Understanding of Company Resale Value 

Business owners, at some point in their growth journey, may think of selling their companies, Many startup owners start a business only to sell it to big companies when the value of their business increases. If you are thinking of selling your company, it is critical to know its real value. A business valuation in this regard should start even before your company goes up for sale in the open market.

This will give you more time to increase the company’s value so that you can fetch a higher selling price. Understanding a company’s resale value can give you the power to negotiate a better selling price. You may use black-and-white statistics, provided by audit firms in Dubai, to strengthen your stance on the higher selling price. Big companies try to determine the value of their business two to four years before its contemplated sale.

Better During Mergers/Acquisitions 

If a big company asks about buying your startup, you must be able to show them the value of your business as a whole. It means what its asset withholdings are, how it has grown, and how it can continue to grow. Big corporate groups will be trying to acquire your business or merge it with theirs for the lowest possible amount.

If you have not conducted a proper business valuation, you will be forced to sell the company for the price they offer. However, if you know the true value of your business you can sell it for the appraised valuation numbers provided by auditors in Dubai. If the potential buyer offers a less price, you can reject the deal or enter into a negotiation mediation. This will help both parties arrive at an amicable agreement on the price.

Provides Broader Access to More Investors 

Companies often seek additional investment from outside when they want to fund their growth or save it from financial collapse. However, an investor may ask you to see a full valuation report of your company. Potential investors will also ask you to provide a valuation projection based on their provided funding. They ask for such reports as investors want to know where their money is going and how it will provide them with a return on the investment. You will succeed in attracting the attention of potential investors when they can see that their funds will carry the company to the next level, increase its value, and put more money back into their products.

What Should be the Frequency of Conducting a Valuation? 

Once you determine the business valuation for your company, it’s time to set new goals to increase its value in the coming year. Every year you should set aside time to compare the valuations of the previous years to gauge growth and losses and identify where the scope for improvement is. Conducting a business valuation annually is advisable for you as knowing the worth of each component of your business is critical to make informed decisions.

How can Audit Firms in Dubai Help Businesses?  

Audit firms in Dubai can help you make a sound decision when you are faced with situations such as attracting investments, planning a succession, onboarding a shareholder, marital dissolution disputes, estate planning, raising investment capital, determining capital gain etc. Any of these situations will require you to carry out a valuation of your company’s assets and liabilities to determine its true worth.

The best auditors in Dubai such as Jitendra Chartered Accountants (JCA) can help you with hassle-free business valuation. By availing of JCA’s audit services in Dubai, you get to work with a team of qualified professionals. JCA has more than 20 years of experience in the UAE and has served clients from all kinds of industries irrespective of the size of their business and assisted entrepreneurs in making the right decision.