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Business Valuation

Business Valuation

1. Concept Business valuation is widely understood and accepted as the detailed investigation and evaluation of a company’s activities in order to determine the present and potential value of a business. Subjects of application are companies that have been and are preparing for equitization; companies that are expected to have significant changes in the ownership

1. Concept

Business valuation is widely understood and accepted as the detailed investigation and evaluation of a company’s activities in order to determine the present and potential value of a business. Subjects of application are companies that have been and are preparing for equitization; companies that are expected to have significant changes in the ownership or capital structure of the company: merger, joint venture, affiliation, capital transfer, company acquisition or franchise,…; companies that are about to issue bonds for the first time to the public or companies that are on the way of development and expansion of operation scale, or there is a change in the organization of production and business activities.

2. Reasons to determine business value

Determining business value to assist in the restructuring of equity capital. First, shareholders or investors want to get a detailed grasp of the company’s current situation before making a final decision. They want to know the opportunities and growth potential for the future of the business. In particular, they want to understand unexpected debts, such as tax issues, potential risks of litigation, disputes.

Determining business value helps prepare for an initial public offering (IPO). The Stock Market imposes certain requirements and rules on the type of information a company is required to disclose in its IPO documents (known as the Prospectus). The “Business Valuation” process must identify and address the company’s core performance and opportunities and risk factors. The success of an IPO depends heavily on the preparation process. Without this thorough preparation, the parties involved in the IPO may face difficulties and the company may be significantly reduced in value upon listing, thereby adversely affecting the interests of the owners.

Determining business value helps to improve the overall performance of the company in the face of poor performance. The business valuation process objectively assesses a company’s strengths and weaknesses. By identifying and pointing out the problems or areas that best represent a company’s weaknesses, the “Business Valuation” process is a tool to help a company objectively or “unlocking” opportunities/potential and adding value to current and future shareholders.

3. Benefits

The benefit of the business valuation process is the ability to aggregate, evaluate, analyze and match past data and future growth prospects of the Business in an accurate and comprehensive report.

By identifying the company’s strengths, weaknesses and core values, business valuation becomes an effective tool to help the company realize opportunities and add value to shareholders or future investors.

Besides, in necessary cases, plans and recommendations will be drawn up for pre-IPO and post-IPO activities.

In addition, business valuation also indicates necessary changes in the financial system, shareholder composition or corporate structure because this process will create an open forum for the company to discuss in depth and consider whether these structures are consistent and beneficial for the future of the company.

Business valuaiton helps the Board of Directors make tough decisions, such as selling activities or eliminating unprofitable or non-key business activities, to focus in high-value activities.

Business valuation provides analysis of the company’s governance and operating systems, and provides capacity assessments for a number of key human resources positions.

A comprehensive and successful business valuation project will bring positive effects because a team of consultants will discover effective areas of the company’s business, thereby making recommendations, solutions to maximize the effectiveness of those strengths to increase value for shareholders and business owners.

4. Method of determining business value

Currently, people often use the following methods to determine the value of a business:

  1. Net asset value method
  2. Dividend Flow Discount Method
  3. Profit discounting method
  4. Discounted cash flow method
  5. Price/earnings ratio (P/E) method

5. Some of VIVC’s customers in the field of business valuation

Bamboo Airways Joint Stock Company Anco Family Food IMG Investment Joint Stock Company
Cuu Long Real Estate Development and Investment Co., Ltd Hanh Phuc International Multi-Specialty Hospital Joint Stock Company MM Mega Market Vietnam
Hoang Anh Gia Lai Agricultural Joint Stock Company Dai Quang Minh Real Estate Investment Joint Stock Company Saigon Newport One Member Limited Liability Corporation


LIST OF DETERMINATION OF BUSINESS VALUE PERFORMED BY VIVC EXPERTS