With the help of this program you can calculate the price of your company on your own. The program does not set a limit to the size of the company.
The price of a company is based on two concepts, investment value and net worth. How these concepts are valued during the actual transaction is entirely up to the agreement between the seller and buyer.
Investment value can simply be viewed as the amount of equity that will return the amount of profit given the interest rate, that the buyer or the seller requires.
Example: Company's profit after taxes is 50.000
Buyer wants a 20 % rate of return for the investment.
Calculation: 100 x 50.000 / 20 = 250.000
Net worth is the difference between company's assets and liabilities, or in other words the value which is left when all the assets have been sold and then all the debts and taxes have been paid.
When valuing the net worth special analysis needs to be done on the following balance sheet items: goodwill, current assets, how modern is machinery and equipment, and actuality of receivables.
Business analysis should always be done when buying a company. While assessing the investment value, buyer calculates the possible synergy benefits and considers the possibility to depreciate the purchase price in taxation.
The following investment value assessment example comes from a small family run company.