Company valuation is the premise of investment, financing and trading. The valuation of a company is helpful for the company managers to correctly evaluate the intrinsic value of the company or its business, so as to establish the pricing of various transactions of the company. Enterprise valuation is also an important part of due diligence of investment banks, which is conducive to the exemption certificate of investment banks when financial problems occur.
The logic of company valuation is that value determines price, and the value of a company is influenced by macro, meso and micro factors, including company fundamentals, industry factors, macroeconomic factors and psychological expectations. When an investment institution injects a sum of money into an enterprise, the rights it should have first depend on the value of the enterprise.
Valuation rule of thumb
Judging everything by fair market value: this is the most specific valuation factor, which is commonly known as the asset method. New companies usually have no fixed assets. Although they look worthless, you should take stock of everything your company owns.
Give real value to intellectual property rights: the value of patents and trademarks is not certified, especially temporary patents and trademarks. The new company applied for a patent for their software tool algorithm, which is very positive and puts itself several steps ahead of competitors who are preparing to enter the same field.
Value of all responsible persons and employees: Value is distributed to all professional employees who need to pay wages. Their skills, training and business technical knowledge are very valuable.