Business valuation is the process of determining a company’s current situation and value using objective measures and assessments of all aspects of its operations.
Business valuation is essential in many business situations, such as:
Alternative investment companies are subject to the regime of periodic valuations of portfolio investments. In the case of AIFs listed on capital markets, valuations are most often carried out on a quarterly basis. In other cases, valuations are usually required once a year, although many of our clients request more frequent updates of their investment portfolio value.
In the context of AIFs, it is worth noting that we prepare not only valuations of equity instruments but also of debt instruments (loans, credits, bonds) and derivatives. As one of the few firms on the market, we provide debt portfolio valuations in line with the effective interest rate method required by regulation, as well as with the estimation of provisions for expected credit losses.
We have designed our services so that every entrepreneur and every investor facing the situations mentioned above receives comprehensive and effective support.
We know that business valuation is, for many people, an unclear and complex process, and therefore difficult to estimate in terms of time and cost.
Understanding both the needs and concerns of our clients, we have tailored our services to make it easy for everyone to navigate the entire valuation process. We further enhance its transparency by delivering comprehensive reports that highlight all key aspects of the assessment.
The first stage is to identify the specific client’s needs and to collect and analyze all necessary financial data. The best indicator in this process is historical performance, although it is not always available.
For many methods, making reliable forecasts of the future is also extremely important. In the case of valuing a company using the DCF method, this would, for example, involve projecting future cash flows.
Having verified financial data and prepared forecasts provides the basis for performing the necessary calculations. At this stage, it is often also important to decide whether the analysis will be carried out from the perspective of the entire company or, for example, only from the perspective of equity holders.
With some valuation methods, the calculated results may require certain adjustments and updates. This is the case, for example, with the FCFF method, where the calculated discounted cash flow values need to be adjusted for net debt.
The final stage of valuing a company or startup is always the summary and presentation of the results. This must include all key assumptions, the discount rates applied, and the justification for the forecasts used.
It is therefore possible to estimate not only the value of a mature company but also that of a newly established business, even one still at the conceptual stage.
We value not only established companies but also startups. We have the experience and know-how to approach the valuation of such entities. There are methods that, even in the absence of extensive data, allow for an effective and simplified valuation of a startup. We conduct valuations at every stage of a company’s development, including:
Thanks to our strong expertise in financial modeling, we are able to provide our clients with additional analytical support in processes such as strategic business decision-making and financial controlling.
Genprox has completed more than 150 business valuation projects. On the transactional side, our main clients have been venture capital and private equity funds. The companies we have valued most often came from the following industries:
Leveraging our position as a market leader in financial and accounting services for alternative investment companies, we carry out dozens of investment portfolio valuations for alternative investment companies each year.
Every company is different. In each case, we must therefore adapt the valuation methods to the specifics of the given business, particularly to its stage of development. What are the main methods available to us?
Analysis of future income and its impact on the current value of the company. Income-based methods (including the DCF method – Discounted Cash Flow) are approaches to company valuation that assume the value of a business lies in its ability to generate surpluses of revenues over expenses. Within income-based valuation methods, future cash flows are therefore projected over a defined time horizon.
Comparing the company with similar businesses in the market Multiples methods, also known as comparative valuation methods, are another very popular approach. They are based on available financial ratios (such as P/E, EV/EBITDA), comparing the company under review with the most similar entities. This method is not only very straightforward but also relatively objective, as it avoids subjective forecasts and judgments.
Asset-based valuation methods are approaches that primarily take into account the assets of the entities being analyzed. However, basing the assessment on the book or market value of assets has one drawback: the difficulty of valuing certain asset components, such as intangible assets and intellectual property rights.
Business valuation is not easy. This is especially true for companies and startups that have just launched a new idea, have little or no revenue, and are incurring consistent losses.
We have already completed more than 150 Due Diligence projects and business and startup valuations. We therefore understand the needs of potential investors and, based on established standards, are able to select the appropriate valuation methods for each specific entity, taking into account factors such as its stage of development and the industry in which it operates.
We also have extensive experience, expertise, and professional certifications, including: Investment Advisor, ACCA, Tax Advisor, and Attorney-at-Law.
Under one roof, we therefore offer a comprehensive service that is not available anywhere else.
The outcome of our work is a comprehensive report of the assessment, which identifies all key financial and tax risks.
Genprox Advisory therefore provides top-quality, comprehensive Due Diligence analyses and company and IP valuations for VC/PE funds, strategic investors, and potential portfolio companies.
We are an accounting and advisory firm specializing in the accounting of AIFs. We possess broad professional expertise and hold certifications such as Investment Advisor, ACCA, and Tax Advisor. This enables the VC funds we serve to receive, in one place, a comprehensive service unavailable from any other accounting firm or law office. We specialize in servicing VC funds and have a deep understanding of their reporting needs. As a result, we are able to provide full accounting, tax, and reporting support for any type of VC/PE fund in Poland as well as for alternative funds in Luxembourg.
Business valuation is the process of estimating the fair value of a company for purposes such as transactions, reporting, restructuring proceedings, and more.
Having a reliable valuation enables making optimal investment decisions, effectively negotiating the investment agreement, and accurately reporting management information.
By entrusting the preparation of a valuation to experienced and independent specialists, you gain assurance of a professionally executed service and significantly greater credibility among stakeholders (e.g., auditors or tax authorities).
There are many entities on the market that carry out business valuations, including consulting firms, advisory companies, brokerage houses, banks, and investment boutiques. To make the right choice of advisor, it is worth considering the reputation and experience of the experts.
The costs of conducting a business valuation depend significantly on the agreed scope of work and investor expectations. Valuation costs range from several tens of thousands of PLN for young companies to several dozens of thousands of PLN for mature businesses. Factors such as the complexity of operations or the need to consolidate data in the case of operating within a capital group may also affect the cost of valuation.
The duration of a valuation depends on the size of the company and its readiness for the valuation process. A simple company valuation can be carried out by a professional team in as little as 3 business days. Naturally, the more mature the business, the longer the valuation process will take.
The business valuation process, although multifaceted and potentially complex, can in principle be carried out by any person who has the appropriate qualifications and knows how to do it.
The choice of such a person is crucial, as it directly affects the valuation itself and its accuracy – which in turn may have an impact on the future of the company and the individuals connected with it.
It is therefore worth doing it right and choosing proven and highly specialized solutions. So, what should be taken into account when selecting an entity to perform a business valuation? Here is a short list of positive criteria:
Yes, for AIFs operating on the basis of registration with the Polish Financial Supervision Authority (KNF), the valuation of VC/PE fund portfolio assets may be carried out by an accounting firm.