Company Valuation in Mergers and Acquisitions

In company mergers and acquisitions which increases gradually in the market of Turkey, it is very important to determine that the offers, which are given or taken by the seller or purchaser who want to sell their company or want to buy a company, are suitable or not.

Some of the methods which are used in the evaluation of company value are based on the current status of the business, some of them accept the earning power of the business in the future to determine the firm value. Although the approaches based on the current status of the business have a crucial advantage such as easy estimation, the company value is important and related extremely with the earning power of the business in the future.

While making company valuing, the possibility of making a valuation mistake should minimized by using different methods as much as possible and it should be tried to reach to the real value of the company. It must also be remembered that the different sizes of companies that included the same sector are different value multipliers like each sector has own unique dynamics. Therefore, as the methods to be used are determined, the characteristics of the firm and sector should not be avoided.

The method which is used widely in company valuation in present time is the methods of Discounted Cash Flow. According to the discounted cash flow (DCF) method, which lightens up the future of the business, the company value can be obtained by the current state of the company structure, customer portfolio, share in the market, its potential and organizations structure and administration staff and the analysis of cash flow that is expected to occur in the future.

It is crucial that the parties receive professional support, at the end of the planning of legal procedure primarily, company value is estimated, company sale strategy is formed, pre-sale preparations and planning is completed, presentation of the company in professional quality is prepared, receiving support for the administration of possible negotiation process, and making preparations for due diligence (detailed company examination) in company mergers and acquisitions.

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