valuation
Business valuation is the structured estimate of what an operating business is worth to a specified buyer or owner, using income, market and (less often) cost evidence. The output is usually a range for enterprise value and equity value, not a single magic number.
Owners often treat last year's profit, a neighbour's sale, or a bank's collateral figure as "the" worth of the firm. Professional business valuation separates three questions that those shortcuts mix: value to whom, for what purpose, and as of which date. IVS frames the work as a documented application of the market, income and cost approaches, with the conclusion expressed as a range supported by evidence rather than a slogan.
Purpose changes the number. A sale to a strategic buyer, a minority recap with a private equity fund, a tax or litigation opinion, and an IFRS impairment test under IAS 36 are not interchangeable assignments even when they start from the same accounts.
| Approach | Core idea | Typical tools |
|---|---|---|
| Market | Price evidence from similar assets | Comparable companies, precedent transactions |
| Income | Present value of expected cash | Discounted cash flow, capitalisation of earnings |
| Cost | Replacement or reproduction of assets | Used more for asset-heavy or early-stage shells than for going concerns |
Most going-concern work triangulates income and market evidence. Cost is a cross-check, not the headline, when cash generation is the economic engine.
Practitioners almost always value the operations first as enterprise value (EV), then bridge to equity value:
Equity value = EV − net debt − other debt-like items ± non-operating assets
An EBITDA multiple or revenue multiple prices EV. A DCF of unlevered free cash flow also prices EV. Mixing an equity multiple with an EV denominator (or ignoring net debt) is the fastest way to misstate what shareholders actually receive.
Harbourline Components is a fabricated industrial supplier used only as an illustration, not a live quote.
| Item | Amount |
|---|---|
| Last-twelve-months revenue | €42.0m |
| Adjusted EBITDA | €6.8m |
| Selected EV / EBITDA | 8.5x |
| Implied EV | €57.8m |
| Net debt (debt + leases − cash) | €9.2m |
| Implied equity value | €48.6m |
A parallel DCF with mid-single-digit growth, a 9.5% WACC and a 2.0% perpetual growth rate might land EV in the mid-€50m area. The point of the triangulation is the overlap, not a forced single point.
Buyers underwrite cash they can defend in diligence, not headline accounting profit. Funds screen on entry multiple, leverage capacity and exit assumptions; strategics add synergy that should be valued separately from stand-alone worth. On the sell side, a coherent valuation pack (normalised earnings, net-debt bridge, peer set, DCF sensitivities) shortens the gap between teaser and binding offer.
Valuation is an estimate under uncertainty. Thin private-market evidence, owner-dependent earnings, and forecast error all widen the range. Fair-value measurement under IFRS 13 is a specific accounting construct; it is related to, but not identical with, a negotiated deal price.
Dazur treats valuation as a living deal artefact: normalised earnings, the EV-to-equity bridge, and a peer set that can survive a buyer's model. Owners who arrive with a documented range—and the adjustments behind it—raise more cleanly and waste fewer meetings arguing about a round number that never had a method behind it.