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Business valuation

Introduction

This chapter covers several different methods of business valuation.

Equity valuation is particularly important because it forms an important part of the
negotiations in any acquisition.

However, it is very difficult to be precise as to what the equity value should be,
because in reality the final valuation will depend on the bargaining skills and the
economic pressures on the parties involved.

Therefore, for exam purposes:

 consider the different valuation methods to be complementary, to enable you to
suggest a possible value region, and

 do not put yourself under pressure in the exam to come up with a precise
valuation, as equity valuation is not an exact science.

However, it is essential that you are able to comment on the suitability of each
valuation method in a particular scenario.

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