Procedures

Valuation step-by-step plan
Valuing a business is a time-consuming and demanding task that can easily require a number of weeks to complete.
But dga-assist's procedure divides this into clear steps. You can read about our step-by-step plan below and what we require from you.

Find out more about how we value here.

How do we value a business?
There are still many misunderstandings and a lot of ineradicable folklore floating around about how you determine the value of a business. If we assume that a business is a going concern, then there is really just one method with a sound theoretical basis: the discounted cash flow method. This method consists of calculating the sum of the expected future cash flows, adjusted for time preference (100 euro’s to be received today is worth more than 100 euro’s to be received in one year’s time) and risk.

Not in the annual accounts
An investor is prepared to put money into a business if he expects that he will get it back with the returns he has in mind. But he is not prepared to pay for the profits that the previous owner has already netted. An investor looks to the future. That means you can’t discover the value of the business in the annual accounts.

The annual accounts are intended for a different purpose and give a view of the business through a rearview mirror.

A business has value for an investor if he can expect the business activities to generate returns. It’s about the returns that will accrue to the investor: the cash flows that are not required for investments and that can be withdrawn from the business.

The accounting profit is not suitable in this context as a measure of the results, because this concept depends on opinions and can be interpreted several ways.

Discounting
You cannot simply add up all the expected cash flows that will become available at different times in the future. First they have to be discounted to the same moment in time at a correct discount rate, that reflects the time preference for money and the risk of the cash flows.

It’s called the discounted cash flow (DCF) method, named after the calculation method used. There are several arithmetical variations of this method. For instance, the much-used Adjusted Present Value (APV) method.

1. When a job starts, we send you a nondisclosure agreement and request an information package from you. Click here to see the contents of this information package.

Contents of information package.

General information
History of the business
Description of the business

Legal information
Articles of association
Shareholders’ register
Shareholders’ agreements

Financial information
The annual accounts of the (four) preceding years.
The business plan for the coming years

2. When we receive the information package, we analyze it thoroughly and construct a valuation model for the business. If necessary, we request more information via e-mail.

3.a. We plan a telephone interview with the owner and/or management team to discuss details relevant to the valuation. At that time we also list any outstanding questions or missing information.

3.b. For comprehensive valuations (Valuation AAA) we call by telephone to plan an on-site visit and personal interviews.

4. We use all the information we receive, the research and the analyses (not for the calculated value Valuation A and summary Valuation AA) as the basis for a provisional valuation of the business.

Reasearch and analyses
a. An external analysis
Which external opportunities and threats does the business face?

- analysis of macro-economic external influences
- analysis of the branch of industry
- analysis of the competitive landscape

b. An internal analysis
What are the strong points of the business and what are the weak ones?

c. A SWOT integration analysis
A confrontation of strengths and weaknesses with opportunities and threats plus the formulation of strategic options.

5. We send the provisional valuation report and plan a telephone meeting with the DMS and his advisors to discuss this report. We check whether we are on the right track and whether we have forgotten anything.

6. We modify the provisional report according to the points discussed and send a draft valuation report for any further comments.

7. We make a final valuation report using the feedback on the draft and we send this report to you.

Business coaching step-by-step plan

Business coaching is an activity that is tailored to the customer. dga-assist does have a few fixed activities:

1. Measuring value: the valuation as a measuring instrument.

2. Creating value: determining a strategy to achieve growth and perfomance improvement and reduce risks.

3. Managing value: introducing management for business value in the organization. These activities can take us to all areas of business studies. Just consider strategy, organizational science, human resources, marketing and financial management. We specialize in strategy and financial management.

dga-assist^®
valuation & coaching

Wouddijk 1
3238 LG Zwartewaal
telefoon: 0181 28 45 65
email: info@dga-assist.nl
kvk: 290 35 097