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  • IMPORTANCE OF CARRYING OUT BUSINESS VALUATIONS OF PRIVATE COMPANIES
Article:

IMPORTANCE OF CARRYING OUT BUSINESS VALUATIONS OF PRIVATE COMPANIES

19 August 2021

A valuation of a business is the process of determining what a business or a company is worth. The process of determining what a business is worth is concerned with establishing the intrinsic value that resides within that company, that is, the future benefits that can be enjoyed by owning a share of the company or business. In retail trading, the price of a product is ordinarily set based on factors that include but are not necessarily limited to the costs that went into producing that product, the forces of supply and demand, as well as consideration of the product replacement costs. On the other hand, in determining the value of a company, the process is concerned more with trying to put monetary value to the expected future benefits that would accrue to the current or future owners of the company.