Financial Evaluation
Financial valuation can be used in a variety of contexts, including for business buy and sell transactions, mergers and acquisitions, asset or liability valuations in a receivership proceeding, or for the measurement of a company’s performance.
The financial valuation methods used to estimate the value of a business or asset may vary depending on factors such as the nature of the asset or business, the industry, the regulations in force, or the valuation objectives.
Common financial valuation methods include:
The comparator method: This method consists in evaluating the undertaking by comparing it with similar undertakings in the same sector of activity.
The Discounted Cash Flow (DCF): This method estimates the future value of cash flows generated by the business and then discounts them to account for time and risk.
Wealth method: This method estimates the value of a company by taking into account the value of its assets and liabilities.
Many assets can be valued, including:
Tangible assets, such as land, buildings, equipment and vehicles;
Intangible assets, such as patents, trademarks, software, copyrights, licences and contracts;
Financial investments, such as equities, bonds, investment funds, derivatives and currencies (preference shares (ADPs), stock warrants (BSAs));
Receivables and debts, such as accounts receivable, accounts payable, loans and loans (convertible or simple bonds…);
Stocks and raw materials;
Cash, such as bank accounts and short-term investments.
Our advisors:
Custom support
Our experts are able to support all stakeholders in their evaluation problems (SMEs, SMEs, midcaps, international groups, listed companies, investment funds).
Accounting measurement is a method of measurement that involves estimating the value of an asset or liability in the company’s books and records. This valuation method is used in the preparation of a company’s financial statements, such as the balance sheet, income statement and cash flow statement.
The accounting measurement is generally based on historical costs, i.e. the initial costs of acquiring or producing the asset, and the adjustments required to account for wear and tear, obsolescence or depreciation of the asset over time.
For example, to measure property, plant and equipment, an enterprise can use the net book value method, which subtracts accumulated depreciation from the original asset value. Similarly, to evaluate inventory, an enterprise can use the weighted average cost method or the cost method.
Contexts and Methods
The accounting measurement may be different from the market or present value measurement, which take into account current market conditions and may give a different estimate of the value of an asset or a liability. However, accounting measurement remains an important method of measuring an enterprise’s assets and liabilities in the financial statements and providing a true and fair view of the enterprise’s financial position.
We intervene in different valuation contexts (accounting, transactional, tax or litigation).
We use the methods applied in the light of the standards commonly applied by evaluation professionals and the recommendations issued by the various professional associations:
- The CCEF (Compagnie des Avis et Experts Financiers)
- Capital Investissement (AFIC, EVCA, BVCA, etc.)
- International Private Equity and Venture Capital Valuation (IPEV Guidelines)
- of the SFAF (Société Française des Analystes Financiers)
- MFA.