We use data from the past and the price/quantity structure for products or services to check the plausibility of your corporate plan. We rely on analyst estimates and market data from comparable companies to check the plausibility of your business plan and to derive a range of sales revenue growth and margin figures that your company should generally achieve. We will explain to you the assumptions that form the basis of our calculations. If there is no business plan or only an income statement plan, we will be glad to support you in the preparation and in the planning of synergies for a forthcoming M&A transaction.
Discounted Cash Flow/German Income Approach
At the core of the valuation we transfer the corporate plan to an appropriate valuation method. We derive the cash flows from the planning, calculate the capital cost rate, the so-called terminal value, and ultimately the corporate value. As a standard, we use the WACC method – if desired, we will also use the German income approach [Ertragswertmethode] or other methods. If applied correctly, these methods lead to the same results under equivalent assumptions and are also the most academically recognized and most popular methods in practice. Completely different in terms of structure is the calculation of the so-called net asset value [Substanzwert], which in practice is only necessary in special situations.
In your corporate planning, we work with you and try to plot out the future expected development of your company. Such forecasts are subject to various degrees of uncertainty, depending on the sector. In order to make the impact of another development on the corporate value and the estimate error transparent for you, we will calculate appropriate sensitivities for the most important parameters of the valuation.
Multiple Valuation/Multiplier Methods
The final plausibility check of the results takes place through a valuation with market multipliers. We use the stock price and M&A transactions of comparable companies to derive the EBITDA (earnings before interest, taxes, depreciation and amortization), EBIT (earnings before interest and taxes) or other, sector-specific multipliers that – used for the appropriate key performance indicator of your company – provide a rough estimate of the value of your company. The corporate value calculated in the DCF valuation should be within the range of the multiples, even if both valuation methods adopt very different approaches.