“A business valuation involves logical application/analysis of historical/future tangible and intangible attributes of business”. Do you agree with this statement? What are the aspects involved in the preliminary study o

Yes, I do agree with the given statement. A business valuation involves analytical and logical application/analysis of historical/future tangible and intangible attributes of business. Valuation is a process to assess the worth of an enterprise or a business. In case of corporate restructuring through mergers, amalgamations, takeovers, etc., valuation assumed great importance due to determination of the transaction price. Valuation plays a vital role in deriving the share exchange (swap) ratio. Determining the value of company/business/share is a complicated, elaborative process. Valuation shall be exercised judiciously and diligently. However, it is a more a subjective than objective process, and depends on the skills and perceptions of the valuer/expert. It is an application of facts, figures, skills and insight of valuer. It is more an art than science. Business valuation involves analytical and logical application/analysis of past as well as future tangible and intangible aspects of business. Preliminary study to valuation includes: Purpose of valuation, Goodwill/Brand name in the market, Business environment of the entity to be valued, Estimation/forecast of future cash flows as accurately as possible, Is company listed on any stock exchange, If listed, whether shares of the company are traded frequently? The industry to which the concerned entity belongs to, The industry P/E ratio, past and future growth rate, Who are the competitors locally and globally? Whether any similar valuation has been done recently? The technology concerning the enterprise and its probability of obsolescence, The accepted discounting rates, Market capitalization aspects, Identification of hidden liabilities through analysis of material contracts, Last years audited balance sheets.