Help online business valuation app

Online business valuation application help

1. Selection of valuation date

To begin with the valuation process, you need to select a “valuation date” first. In a business valuation, the term “valuation date” refers to the precise moment in time when a valuer estimates the value of a business or a shareholding. Specifying this date is crucial because the value of a business or shareholding fluctuates over time due to various internal and external factors that influence it.

Our online valuation application relies on quarterly industry multiples. These multiples are calculated using the methodology described in our “Industry Multiples Guide” (which you can download by clicking “here“) and has been written for the users of our Industry Multiples Platform (if you would like to know more about, please subscribe “here“).

Since our multiples are calculated on a quarterly basis, the valuation date options available in the drop-down menu are the past four quarters.

If you need to value a business or a shareholding on a date that falls outside of a quarter’s end date, you have two options. You can either choose to approximate the ideal date by selecting the nearest quarter, or you can contact us to explore alternative solutions for valuation (please write us at: info@salvidio.com).

2. & 3. Selection of industry

Our quarterly multiples are calculated by aggregating individual company multiples into industry aggregates. For more information on the aggregation process and the industry classification we use, please consult the “Industry Multiples Guide“. As explained there, we base our quarterly industry multiples estimates primarily on individual company stock prices and financials, as well as market and industry classification data provided by Standard & Poor’s Capital IQ® database.

To proceed with the valuation process, you must first select an industry. This selection will enable us to apply the appropriate multiples to the data related to the business or shareholding.

Firstly, please select one of the 24 industry groups from the drop-down menu. Afterward, narrow down your selection by choosing from the industries within the selected group. This step will help us apply the most relevant multiples to your valuation.

4. Selection of geographic zone

There are fewer than 100.000 companies listed on the various stock exchanges around the world. To estimate our quarterly industry multiples, we filter out most of them, either due to their size or other factors that may affect the liquidity of their shares, such as “thin trading”. At the end of our filtering process, fewer than 25.000 companies remain available for industry multiples estimation. As a consequence, restricting the selection to a specific geographical reference area may sometimes result in too small a number of companies to properly calculate the multiples.

5. & 6. Input financial data information

We adhere to the EU numbering convention: the thousands separator is a dot, and the decimal separator is a comma. Any decimals beyond the first entered will be rounded off. You can clear the data by pressing the ‘Clear’ button. If you are verifying the carrying amount of a shareholding, the crucial figure that you would want to “check” against a valuation based on multiples (to identify a potential impairment risk) is its “carrying amount”. Therefore, if you do not enter a carrying amount when requested, the estimation process will not proceed further.

7. Input financial data information

The value of your participation is also influenced by its size relative to the entire underlying entity. Please select from the drop-down menu the percentage that most closely matches that of your participation.

8. Adjustment for “level of control” and “marketability”

The selection of an appropriate premium or discount to adjust for ‘level of control’ and for ‘lack of marketability’ is one of the most complex tasks in the valuation process. Please refer to the vast literature on this subject or seek an expert’s advice. We at Salvidio & Partners are ready to be at your disposal.

Need more help and explanations ? Please write us at info@salvidio.com