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Company valuation template

Company valuation calculator google sheets screenshot

Company valuation template

Every time there is a talk about seeking outside investment or going for that long-coveted IPO, the question of company valuation will inevitably come up. It is essential information for company leaders to have.

However, as an entrepreneur, you're adept at finding solutions to problems, but you may not necessarily have the financial skills necessary to find that information in troves of financial data. So, how do you find a fair company valuation without hiring an expensive outsider?

This is where gini's company valuation template comes into play. It provides help to business people and entrepreneurs to understand their company's equity value in less than 10 minutes.

What is business valuation?

The business valuation process determines a company's financial health and economic value. It helps founders to know the fair value of their company. Through valuation models, the net present value, operating expenses of partner ownership, and annual cash flow of a business can be determined.

Business valuation methods can vary depending on the types of businesses, industries, or valuators. The typical valuation methods include:

Why is the business valuation process helpful?

A business valuation should be in exact facts and figures to show your company's strengths and weaknesses. Otherwise, improper valuation can be risky for your company's reputation. Also, it can devalue your company's worth for investors.

Following are some of the fundamental reasons why a business valuation is helpful.

For attracting or seeking investors

A business valuation is essential if you want to obtain any investor's capital. You must provide your company's financial value with evidence of facts and figures.

Also, without analyzing your company's operating expenses, earnings, debts, capital efficency, and forecasted cash flow, how will the investors know how credible your valuation is? A business with a powerful balance sheet, free cash flow, and revenue options can persuade investors to consider funding your business.

For selling the business

A business valuation is an initial step if you want to sell your business. An accurate business valuation can help you interact with interested buyers.

Also, when dealing with multiple buyers, a business valuation ensure you receive a price that is fair according to your valuation. With proper calculation and analysis of your business's terminal value and invested capital, you can decide which offer best suits you.

For selling stock in the company

Another common reason for a business valuation is to bring in partners or sell a company's stock. To invest in or purchase an equity value in a company, investors or buyers are unlikely to make an investment without doing their due diligence on your company's valuation.

Investors determine your company's net present value, annual cash flows, and operating expenses before becoming a shareholder. So, for selling stock in your company, a business valuation process will be helpful. After making a business valuation spreadsheet, everyone could determine their shares, and nothing would be left out.

For determining your company's growth

A business evaluation template helps track your business's annual cash flow and growth. Regularly checking your company's balance sheet allows you to determine your business's year-to-year progress.

With the data of cash flows, you can calculate and manage the financial payments in your company. A business valuation template includes net income, sales, equity, and company cash flow. Also, additional factors worthy of understanding a company's value are included in a typical business valuation template.

For industrial benchmarking

Comparing similar businesses according to financial statements and industry guidelines is called benchmarking in accounting and finance. The growth and performance of a company's services and financial products through industrial benchmarking are analyzed compared to other businesses with the same value.

Understanding comparable similar businesses are necessary for a company's growth. You will learn about your weaknesses so that you can cop them with your best future planning. With benchmarking, you will get to know your internal opportunities that are beneficial for your company's improvement.

A business valuation is a great source to analyze your company's worth in the market value. You can compare your business's growth with similar companies to decide on some essential factors. These include sales in the forecast period, budget management, and future cash flows.

For taking a bank loan for the company

Loans are part of business, and with ups and downs in the market, loans provide valuable help. Although it's risky to get into debt, maintaining your company's assets can overcome the additional liabilities. With a business valuation, you can predict the chances of getting a bank loan.

If your company needs bank loans to establish any financial sector, you need to check your company's valuation. It will help you estimate your annual cash flows, other assets, and planning purposes. Without business valuation, you can't prove your working capital to lenders, and the investment opportunities will also decrease.

Value your company like an investment banker without hiring one

Calculating your company valuation is a great way to understand what price a company like you would IPO at, and this allows you to work back to what your valuation should be today.

Cash Flow Forecasting Xero
Ray Wyand, CEO of gini
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