Valuation: How Much Is My Company Worth?
Valuation: Valuation is a crucial tool for determining the value of an asset, whether it is real estate, shares, debt securities, or the value of a company.
Quick answer: a company's value depends mostly on the cash it will generate and how risky that cash is. TCP works with three methods (discounted cash flow, multiples of comparable listed companies and multiples of M&A transactions), chosen according to the company and its sector, to reach a value range that holds up in a negotiation.
Why value a company
- Align price expectations among shareholders.
- Back the negotiation with numbers and explicit assumptions.
- Reflect market views and recent deals.
Typical moments: selling a company, bringing in an investor or raising funds, shareholder exit or succession, and judicial recovery.
Three methods
Discounted cash flow (DCF)
Best for mature companies with positive cash flow.
Trading multiples
Compares the company with listed peers and reflects market expectations.
Transaction multiples
Uses the prices paid in recent M&A deals and reflects buyer appetite.
Within an M&A process run by TCP, the valuation takes about 4 weeks.
Frequently asked questions
How much is my company worth?
It depends on its ability to generate cash in the future and on the risk of that cash, compared with what the market pays for similar companies. There is no single number: a valuation reaches a value range using discounted cash flow, trading multiples and transaction multiples. Margins, growth, debt and customer concentration matter as much as revenue.
What are the most common valuation methods?
Discounted cash flow (DCF), multiples of comparable listed companies and multiples of M&A transactions in the sector. TCP chooses the method according to the company’s profile; an asset-based valuation is used in specific cases, such as liquidation.
What is the difference between valuation and sale price?
A valuation is a technical estimate with explicit assumptions. The price is what buyer and seller agree on in the negotiation, influenced by competition among bidders, synergies, payment terms and guarantees. A good valuation sets the range and the arguments for the negotiation.
