Business valuation services for SMEs - UAE - Dubai
- Category: Consultancy services
- Published: Friday, 03 October 2014 12:10
- Written by Abdelhamid M. (ACPA)
What is business valuation for SMEs service?
Business valuation for SMEs is defined as "the act or process of determining the value of a business related to small and medium size enterprises or ownership interest therein." The type of business valuation required on an assignment is contingent on the purpose of the engagement.
Our valuation Service is designed to assist business owners in understanding the approach of purchasers to valuation and the value achievable in the event of a sale.
Our accumulated experience in private company sales across a broad range of industries in the UAE has given us a strong understanding of the value of a company to a purchaser. In addition, our market presence and ongoing company sale activities provide us with a continuous insight into market pricing and valuations.
All businesses and companies have unique features. In some cases these can have a material bearing on value – for example, a piece of technology or Intellectual Property or know-how that is a key competitive advantage or a business where a single customer represents a high proportion of turnover. To be able to provide its clients with an informed insight into valuation, "Abdelhamid & Co Certified Public Accountants & Auditors" needs to understand the important business attributes. There is therefore a short company and business information gathering procedure that "Abdelhamid & Co Certified Public Accountants & Auditors" undertakes for each valuation, which includes:
- Analysis of the Company, including statutory and management accounts
- A meeting at client offices in UAE to discuss the business in further detail.
What create demand for business valuation for SMEs service?
Businesses or their assets are valued for a variety of reasons. Some of the more common purposes for valuation are:
• Mergers and acquisitions
• Litigation and ownership disputes
• Shareholder oppression cases
• Financial reporting
• Goodwill impairment
• Buy/sell agreements
• Family limited partnerships
• Reorganizations and bankruptcies
• Business planning
Various types of SMEs businesses can be valued:
• Limited liability companies
• Sole proprietorships
What is our valuation procedures ?
Numerous procedures and factors must be considered in performing a business valuation.However, they can generally be classified into the following areas:
• Understand the purpose of the engagement
• Understand who the client is
• Understand the client’s use of the valuation
• Determine the standard of value and its definition
• Determine the premise of value
• Determine the users of the value
• Determine the interest or assets to be valued
• Ascertain whether discounts and/or premiums are to be considered
• Analyze the company’s financial information
• Gather information about the company or assets
• Gather information about the industry and economy
• Consider all approaches of value and select the most appropriate
• Apply the approaches to value through the various methodologies
• Reconcile the values
• Apply discounts and premiums if applicable
• Write the report if applicable
• Ensure compliance with professional standards, if applicable
What are the approaches to value ?
There are three major approaches can be applied for the businesses but only two approaches convenient for value any SMEs:
1. The income approach
2. The asset approach
1. The income approach
The income approach to fair value measurement estimates the fair value of an entity, intangible assets, or other assets and liabilities by calculating the present value of future cash flows that the entity or asset is expected to generate over its lifetime.
2. The asset approach
The asset approach defined as a general way of determining a value indication of a business, business ownership interest, or security using one or more methods based on the value of the assets net of liabilities.
A fairness opinion is generally required when a SME is involved in a merger, acquisition, or other type of transaction where the board of directors or the owners wants to have an independent appraiser give its blessing to the transaction.
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