Assessing the worth of your company is required from time to time either by laws (tax or corporate laws) or because of commercial reasons. Buyers and sellers of businesses frequently put their own values on a business, which are distorted by their own perceptions of its strengths and weaknesses. It is therefore useful to have a company valuation in India to be carried out by a third-party expert.

There are various factors that affect company valuation in India, such as the assets of the business, its income, its competitive position in the market, its future prospects and past track record, etc.

What are the benefits that you can hope for by roping in a professional though?

Raising funds – If you have been considering raising funds from an external party, it is important to first be aware of what your business is worth. It is also important at this stage to create robust business forecasts, which can be presented to potential buyers and which will form the basis of the company valuation.

Resale Value – If you have considering selling the company then you would have to know its true value. Getting in touch with an expert for valuation of the company should have to begin well ahead of the actual selling process. Remaining informed about the real value of your company will help you to enhance its value so that you obtain a good price from interested buyers.

Get the Real Picture – Engaging a valuation firm or a professional with years of experience in valuation can help you to understand the facts about your company. While you would be sure of being provided with the figure ascertaining the equity value of the company, you will also get to know more about the market parameters governing valuations and the relative position of your company vs. similar companies. This also makes you more conversant with the factors that are important to potential buyers.

Negotiations during Merger & Acquisitions – No business can afford to remain stagnant for long. However, you might find it easy to merge your company with a bigger rival or let it be acquired by them. Getting a company valuation in India will be necessary for you to know whether to accept or reject the offer on basis of the price offered. You would also be able to negotiate the terms armed with the latest figures showing the appraised value.

Related reading:

Decoding tax valuations under the Indian Income Tax Act

Valuation for companies – special factors

Company valuations – a changing landscape