Understanding the true value of your company or assets is important before looking for investors. This is an estimation of your company, which can reflect the projections and expectations of the company and investors. So, what is a valuation report and why is it important when looking for investors? This detailed guide will dive into the fundamentals of a valuation report, its benefits and how to use it to secure investments.
Operate your Business like a Pro
A company‘s valuation report is among the best elements that quantify its value and success. In other words, it shows its future potential or promising value creation for stakeholders. A full valuation report for your company forms an important external signifier of progress. With the help of valuation specialist companies like Price Bailey, you are sure to understand your business‘ transactional landscape, how it creates value and strategic positioning.
Whether you are a business requiring accurate financial reports or an investor looking to increase your portfolio, it is important to work with professionals to make informed decisions. Valuation specialists, like in the case of Price Bailey, follow a specific approach depending on the type of business and other affecting factors. The combinations of skills that come with qualified experts in the field offer insights that translate to informed judgments and opinions on a certain company. Being in the industry for a while now, professionals will know the valuation technique to use, why and when. An accurate and up-to-date valuation report is one of the best ways to pitch to investors and get them on board.
Using Valuation Report to Secure Financing
Securing financing or getting investors on board is not something that most businesses, especially start-ups, find easy. However, with the help of a full valuation report from a trusted valuation specialist company, you can save the day. That’s not all; you need to understand certain parameters first to be on the safer side.
Your Valuation Aim
From the start, you need to know that a valuation report is your bargaining chip when looking for potential partners. It is a reflection of the assumptions and expectations of your company and investors. Therefore, when going through the valuation process, ensure your company gets a fair price of shares based on things like traction, opportunities, its stages and market. Use the help of professionals to get a report that can communicate your value proposition and vision and align with the interests of potential investors.
Pre- and Post-Money Valuation
Pre-money valuation represents your company before you get any investment, while post-money valuation is the value after getting an investor or the funding you are seeking. For instance, if your company has a pre-money valuation of $100 million and managed to get an investment of $50 million, the post-money valuation will be $150 million. It is important to use reasonable and realistic valuation to show your potential growth and offer future room for expansion. This will not only help you clearly understand your company but will get the right investor through the door.
Valuation Methods
Several methods can be employed when valuing a company. To get an accurate and detailed valuation report, it is advised to outsource valuation services. This is where Price Bailey comes in. This valuation specialist company offers valuation services using different techniques depending on the company in question. They will select the right methods based on your situation and aim and can be backed by evidence. Some of the methods include the market approach, income approach, asset approach and scorecard method.
Valuation Report
This is a special document that clearly shows the valuation process taken and results. It should start with an introduction of your company, stating the valuation scope and purpose. A brief description of your company should be included, indicating the vision, mission, services, products, history, milestones, customers and competitors. Ensure the report has an explanation of the valuation method taken, including sources and data used, projections, calculations, assumptions and formulas used.
The final part of the report should be the findings and recommendations. It seems like an easy thing to do until it is time to do it. Experts can assist to come up with concise, clear and convincing valuation reports to show potential investors your opportunities and strengths.
Negotiation
Negotiating with interested investors is the final stage. Your valuation report should be the basis of your argument and discussion. Using a valuation report as the backbone to support your need for investors can increase the chances of getting the right one. When talking to investors, always have an open mind, as there might be other factors at play.
Final Thoughts
Looking for investors is not easy, especially for start-ups. Therefore, ensure you have all the tools ready to start this challenging journey and one of them is having a clear and concise valuation report ready. When using a valuation report to secure the right investors, aim for a win-win outcome. Remember, valuation is a key element that can make or break your investment efforts.