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Valuation is crucial for fundraising as it helps determine the price at which equity or debt can be offered to investors, ensuring fair terms for both the company and investors. It also gives potential investors a clear understanding of the company’s worth, risk, and growth potential, influencing their decision to provide capital.
Valuation provides insights into the financial health and growth potential of a business, helping owners make informed decisions about entering new markets or expanding operations.
Voluntary valuation refers to the process where a company or individual chooses to have an asset, business, or investment valued, even though there is no legal or regulatory requirement to do so. This is often done for purposes such as mergers, acquisitions, strategic planning, or financial reporting, to gain an objective assessment of value.
Valuation is important for shareholders as it helps determine the true value of their investments, guiding decisions on buying, selling, or holding shares. It also ensures that the company’s financial health and growth prospects are accurately reflected, influencing shareholder returns.
In financial reporting, valuation ensures that assets, liabilities, and equity are accurately represented at their fair market value. It helps in providing stakeholders with reliable financial statements, reflecting the true financial health and performance of the company.
Valuation helps determine the fair price for shares, ensuring they are priced appropriately for investors. It also enables the company to assess how much capital can be raised through the share issue.
Valuation determines the fair exchange ratio of shares for merging or demerging entities.
Valuation impacts mergers and acquisitions by determining the fair value of the company being acquired or merged. It helps in negotiating the purchase price and structuring the deal terms.
An IPO valuation is the process of determining the market value of a company at the time of its initial public offering. This valuation helps in setting the price at which the company’s shares will be offered to the public.
• Value is specific in Point of time
• Value principally depends on the ability of the business to generate discretionary cash flow
• Value also depends greatly on the market forces
• Principle of Risk and Return
• Principle of Reasonableness and Reconciliation of Value
• Value is influenced by Underlying Net Tangible Assets
• Value is influenced by Liquidity
• The Value of Minority Interest is less than the Value of a Controlling Interest.
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