Professional business valuation methods in Maraz
Company valuation is a cornerstone of the services offered by Maraz Corporate Finance. Our methodology integrates various techniques recognized and accepted by the market, guaranteeing an accurate and realistic valuation of the company. Among these methods are:
Discounted Cash Flows (DCF): The Most Realistic Method for Valuing Companies
Considered the generally accepted method for business valuation. The DCF is based on projecting the company’s future cash flows based on a realistic business plan consistent with the Company’s history and present. These projected future cash flows are valued at the present time using a discount rate that is calculated for each specific case based on a proven methodology. This technique allows us to estimate the intrinsic value of the company, reflecting its true value generation potential.
Valuation by Comparable Multiples: Market Context and Comparison
This technique is based on comparing the company with listed companies in the same sector or with recent transactions in the market of a specific sector and in the same geographical area, using various multiples as company valuation criteria such as Price to Earnings (PER), Enterprise Value to EBITDA (EV/EBITDA), Price to Free Cash Flow (P/FCF), or Price to Sales (P/Sales). This approach allows us to contextualize the value of the company within its sector by comparison with its peers.
Adjusted Equity Value: A Tangible Value Perspective
The Adjusted Book Value Method values the company based on its book value, adjusted for gains or losses on assets and liabilities. It provides a tangible perspective of the value of the company, adjusting the book value to more closely reflect the true value of its assets and liabilities.
Net Asset Value: Valuation for Companies in Liquidation
Focused on companies that do not comply with the “Going Concern Principle” or are already in the process of liquidation. In these cases, the appraisal of the companies is made taking into consideration the liquidation values of the assets and the costs of such liquidation, the cost of personnel dismissal, and the costs of ceasing the activity. In the case of a liquidation, the value of the assets must be realized in a short period of time, which, together with the costs of termination of the activity, means that the valuation of the shares or participations is significantly lower than that which would be obtained for the same company under the “Going Concern Principle”.
VC (Venture Capital) Method: A Key Methodology for Startups and Growing Companies
A valuation approach used primarily by venture capitalists to determine the value of an emerging company or startup, especially when it does not yet have a strong financial track record. It focuses on the company’s future growth potential rather than its current performance. This method estimates the future value of the company based on sales projections and applying a high discount rate that reflects the uncertainty and risk of the project.
The Business Plan as the basis for an accurate valuation
A valuation approach used primarily by venture capitalists to determine the value of an emerging company or startup, especially when it does not yet have a strong financial track record. It focuses on the company’s future growth potential rather than its current performance. This method estimates the future value of the company based on sales projections and applying a high discount rate that reflects the uncertainty and risk of the project.
The preparation of a sound Business Plan is essential for any company seeking to grow, attract investment, finance itself or simply improve its internal management. Such a Business Plan will provide the financial projections needed to value a company.
This document not only serves as a tool for internal management and decision making, but also as an essential communication tool for investors, financial institutions, and other stakeholders, demonstrating the viability and growth potential of the company.
At Maraz we develop business plans that cover:
Strategic Analysis
We evaluate the business model, competitive advantages, and market environment to identify opportunities and threats.
Financial Projections
Together with the company’s management, we create revenue and expense projections, balance sheets and cash flows that reflect both realistic expectations and the company’s objectives.
Growth Strategy
We define clear strategies for growth, including market expansion, product development, and possible mergers or acquisitions.
Operational Planning
We detail the necessary resources, both human and material, to achieve the established objectives.
Benefits of linking Valuation and Business Plan
A company’s shareholders receive part of its profits in the form of dividends, but the “generation of shareholder value” has two components: The recurring dividends you receive and the increased valuation of your company over time if the company generates growing cash flows. Linking the Business Plan – and the execution of it – to a valuation model that is updated periodically, allows you to evaluate all of the value generation that occurs for your shareholders.
In addition, understanding and having a good financial model that links the business plan to the valuation allows analyzing how the different variables and “value levers” affect the increase in the value of the shares, which tends to be the main asset of the entrepreneur. This approach allows informed decisions to be made and adjustments and improvements to be made to the business strategy that will result in an increase in the value of the shares and dividends.
Who is our business valuation service for?
There are many circumstances in which a Company Valuation is required.
Here are the most relevant ones:
- Entrepreneur considering the total or partial sale of his company.
- Businessman who is considering the acquisition of a company in his sector.
- Investor who wishes to buy a company.
- In a capital increase to determine the value of the shares or participations.
- In a corporate conflict in which part of the partners decide to leave and sell their part to the rest of the partners or to the company in treasury stock.
- In a startup before a round of financing
- In a succession or inheritance for the distribution of assets if there are shares of commercial companies.
- In a merger of companies to determine the exchange ratio.
The client profile is usually a medium-sized company, an SME, or a family group that, through its administrators, requires the valuation service.
In business valuation, we identify the following keys
The valuation of a company requires a detailed analysis of multiple factors that influence its real value and growth potential. At Maraz we identify the key elements that determine an accurate and informed valuation for investors, buyers and owners.
- Business Model Analysis
- Analysis of Financial Statements
- Environmental Analysis
- Definition of the Medium and Long Term Strategy
- Valuation Maximizing Variables
- Optimal capital structure: debt vs equity
- Projection of Future Financial Statements
- Valuation Methodologies: DCF, Multiples, P/EV...
- Analysis of the Banking Pool, Net Financial Debt
- Valuation Range: Enterprise Value (EV), Equity Value (EqV) / Simulations and Sensitivity Analysis.
Why choose Maraz for your company valuation?
In Maraz we are experts in valuing companies, as we have a consolidated track record after many years of experience valuing companies and business groups in multiple sectors, which allows us to offer accurate valuations, and adapted to each sector and business.
Experience and professionalism
Customized solutions
Transparency and trust
In Maraz we are very specialized in the valuation and sale and purchase of companies. We have performed many valuations of companies for different purposes for more than 10 years. Additionally, all our staff is highly trained in this area. We have a proven methodology and track-record and we have valued from start-ups to large industrial or service groups. We always try to understand the business, its strategy and Business Plan before making the valuation models. It is a tailor-made work and the main “drivers” of the valuation are contrasted with the client to provide a professional service.
Our success stories
At Maraz, we measure our success by the real impact we have on each company we work with. Through a strategic, customized, and pragmatic approach, we have helped numerous companies.
Customer Testimonials
The best proof of our commitment and excellence are the results we generate. Our clients rely on Maraz for business valuation and other financial advisory services with customized solutions and expert support.
Alfredo Muñoz Quiles
Excellent professionals. Capable, trained, honest and attentive.
Ignacio Orts
Javier is very professional, diligent, direct and honest, with an enormous experience, which makes him a safe bet.
Jorge Mataix
A reference consultancy.
Javier, a great professional at the head of it.
Jose Joaquín de Rojas Roca de Togores
Great analytical skills, simple and elegant solutions to complex problems. Complete mastery of the peculiarities of medium-sized companies and family businesses, absolute professional solvency. Highly recommended for his extensive experience and honesty as a consultant.
Mario Fornés Olmo
Javier is a great professional and a very good person. Undoubtedly, whoever is looking for a sincere and quality advice will find his place here. He provides very practical and well-founded solutions. Whoever takes Javier’s advice will be sure to be in the best hands. 100% recommendable.
Salvador Blasco Magraner
Excellent work. A great team of professionals and above all good people who transmit confidence from the first minute.
Frequently asked questions about business valuation
We have compiled the most frequently asked questions about our Business Valuation services. If you do not find the information you are looking for, please contact us and our team of experts will be happy to advise you.
Why is it important to combine Business Valuation and Business Plan?
Combining a company’s valuation with its business plan is essential because the two tools complement each other and provide a more complete and realistic view of a company’s opportunities and risks. This combination brings several key benefits:
- Projection of future value:
The business plan details the company’s short- and long-term strategy, objectives and financial projections. By combining it with the valuation, investors can see how that plan translates into real economic value, making it possible to assess whether growth, revenue and profitability expectations are aligned with the company’s estimated value. - Reducing investment risk:
Valuation alone can be an estimate of the company’s present value, but considering the business plan provides a deeper context for how it plans to achieve that future value. Investors have a clearer understanding of the risks, mitigation strategies and resources required, which improves decision making and reduces the risk of surprises. - Validation of financial assumptions:
The business plan usually includes cash flow projections, profit margins and other key indicators. By valuing the company, it is possible to check whether these projections are realistic or overly optimistic. This helps to validate whether growth and profitability expectations are achievable with the proposed strategies. - Alignment with the market and competition:
The business plan can also detail how the company is positioned in its market, its value proposition, its competitive advantages and its business model. Integrating this information into the valuation process allows the company’s value estimate to be adjusted based on its competitive potential and market conditions. - Attractive to investors:
A solid business plan, which is linked to a reasoned valuation, demonstrates seriousness and preparedness. Investors not only want to know how much a company is worth today, but also how that value can grow in the future. A well-crafted plan aligned with a realistic valuation increases investors’ confidence in the company and its chances of success. - Strategic decision making:
The combination of the two factors helps founders and managers make more informed decisions about the company’s future. Does the strategy need to be adjusted to increase projected value? Which areas of the business plan need more resources or attention to improve expected performance?
When is the right time to value my company?
The right time to value your company depends on several key factors, both internal and external. Here are some indicators that will help you determine when is the ideal time to perform a valuation:
- Prior to a major transaction (sale, merger or acquisition).
If you are considering selling your company, merging with another or acquiring one, a valuation is essential. It will help set a fair price, ensure you get what your company is really worth and reduce the risk of disagreements with the parties involved. - When seeking investors
If you are seeking financing through investors or venture capital funds, a proper valuation of your company is critical. This gives investors a clear reference to make informed decisions about how much they are willing to invest and what shareholding they would be entitled to. - In financing rounds
If you are raising capital in several rounds (such as a Seed round, Series A, etc.), the valuation helps define the price of the company and how the stakes are distributed. This is crucial for founders, as you don’t want to dilute yourself excessively at an early stage or without having a realistic valuation of the business. - To assess your company’s performance and growth
If your company has experienced considerable growth or reached important milestones, it can be useful to conduct a valuation to understand how that growth is reflected in the value of the business. This also helps to adjust strategy, if necessary, and better manage resources. - Change in the market or industry environment
If your industry is experiencing major changes (new regulations, disruptive innovation, consumer trends, etc.), a company valuation will help you understand how these conditions may affect your business and its long-term value. Sometimes valuations are done when the market is at an inflection point, such as a significant expansion or downturn. - Review of strategic objectives or exit
If you are reaching a turning point in your strategic objectives, such as business maturity, a potential sale or an IPO, doing a valuation allows you to see if you are aligned with those objectives. It can be a way to establish whether your company is ready for an exit or if you need to take additional steps to increase its value. - Before making critical decisions about growth or expansion
If you are considering expanding the business, diversifying your product or service portfolio, or entering new markets, a valuation will help you understand the impact these decisions could have on the overall value of the company. In addition, it can be useful when negotiating with new strategic partners or key customers. - When you need to make internal decisions about ownership structure.
If you are considering restructuring the ownership of the company (e.g., selling a stake to a partner, succession planning, or divesting stakes to key employees), the valuation will provide you with a clear framework for determining the price and distribution of those stakes. - For succession planning or sale of the business.
If you are considering retirement or succession (e.g., passing the business to a family member or selling it to a third party), a valuation is crucial to understand the value you can expect to receive and to ensure a smooth transition.
What is the difference between Book Value and Market Value of a Company?
The book value and market value of a company are two key concepts in the valuation of a company, but they represent different aspects of its financial situation and market attractiveness.
1. Book Value (or Book Value)
The book value is the value of a company according to its accounting books. It is calculated by subtracting total liabilities (debts) from total assets (property, investments, etc.). It is a figure that reflects the net worth of the company according to its balance sheet.
Book Value=Total Assets-Total Liabilities.
Characteristics:
- Based on financial statements: Book value is based on the tangible assets (such as machinery, buildings, inventories) and liabilities of the company, according to accounting regulations (such as IFRS or GAAP).
- Does not reflect market value: Book value does not take into account factors such as brand, reputation, future earning capacity, market demand, or the quality of the management team.
- Utility: It is useful to know the value of the company from a financial strength perspective and its ability to cover debts. It is also used in accounting to calculate the company’s net worth.
2. Market Value (or Market Value of the Company)
Definition: The market value of a company is the value that investors are willing to pay for it in the market, generally reflected by its share price if it is a listed company, or by estimates of buyers if it is unlisted. This value is based on the perception of its future potential.
Market Value=Price per Share×Number of Shares.
Characteristics:
- Based on market and expectations: Market value reflects the market’s perception of the company’s growth potential, future prospects, competitive situation and investors’ expectations of the company’s future profitability.
- Incorporates intangible factors: In addition to tangible assets, market value takes into account intangibles such as brand, intellectual property, competitive advantage, quality of management and growth prospects.
- Volatility: This value can change rapidly depending on factors such as market conditions, relevant news, industry performance, or even investor perceptions about the company’s future.
- Utility: Market value is critical for making investment decisions and for determining the selling price of the company in the event of acquisitions or mergers.
Key Differences
- Calculation Method:
- Book Value: Based on accounting, with a simple formula (assets minus liabilities).
- Market Value: Based on what the market is willing to pay for the company, reflected in its share price or estimates of buyers.
- Temporal Approach:
- Book Value: Is a reflection of the company’s current financial position based on accounting records.
- Market Value: It is based on the company’s future expectations, which means that it can change rapidly.
- Elements Considered:
- Book Value: Only takes into account tangible assets and liabilities.
- Market Value: Includes both tangible and intangible assets, and reflects the value that investors assign to factors such as future growth, strategy, innovation and market perception.
- Relationship to Purchase/Sale Price:
- Book Value: Not always related to what a buyer would pay for the company.
- Market Value: Is generally closer to the purchase price in a transaction, as it reflects what investors or buyers are willing to pay.
Other Maraz services
In addition to our Business Valuation service, Maraz offers a range of services designed to boost your company’s growth, solvency and profitability.
