interbaltija

Business appraisal

Interbaltija appraisers provide an objective opinion on the value of the business. You can be sure that the appraisal is objective, as the best experts in the industry are involved in the valuation process.

Specialists help determine the value of assets and liabilities (real estate, vehicles, valuables, reserve financial investments, as well as intangible assets – trademark, intellectual property, developed customer database, etc.). As part of the business appraisal, our customers receive an important evaluation of the company’s operational efficiency, as well as development prospects under the current market situation.

Reliability and professionalism have been Interbaltija’s business card for many years, which allow us to stand out from other appraisers.

Business appraisal is a multi-faceted process, and its results largely determine the future of your company. Interbaltija’s experienced appraisers provide the most objective evaluations, taking into account all business aspects and needs.

Interbaltija guarantees 100% confidentiality and objectivity.

Interbaltija provides a valuation of any kind of change in the business management process: buying and selling a company;

credit insurance;
search for cooperation partners and investors.

INTERBALTIJA PROVIDES VALUATION SERVICES TO PRIVATE PERSONS, INSTITUTIONAL AND CORPORATE CLIENTS, AS WELL AS COURTS AND LAW OFFICES IN LATVIA. EACH OF INTERBALTIJA’S APPRAISALS IS FAST, CONSISTENT, AND ACCURATE, AND THIS IS WHY THE LARGEST BANKS IN LATVIA COOPERATE WITH US, AND INTERBALTIJA’S PORTFOLIO CONTAINS HUNDREDS OF SATISFIED CUSTOMER REVIEWS

Business appraisal is a set of procedures that provide an understanding of the market value of all assets and all components of a business. This may include tangible and intangible assets, current and fixed assets, business-generated revenues and cash flows, business assets, vehicles, land, product inventory, etc.

In providing a business appraisal service, not only is the total asset value of the company taken into account, but also other components such as financial results, the situation in the industry, future forecasts, and macroeconomic indicators.

Business appraisal methods

Business appraisal is a step-by-step analysis of all business areas. Therefore, complete and comprehensive assistance of the managers is important to perform a high-quality evaluation of the company’s business.

Experts use several methods of business appraisal which are chosen based on the company’s situation. The methods are as follows:

The income approach to business valuation – the income of a business is analysed by estimating the amount the owner can receive if the business continues to operate successfully. By analysing the past results of the company, evaluating the development of the industry and the success of the most important competitors, as well as consulting with the owner/manager of the company, the situation is modelled for how the company could operate in the future and what financial benefit the company could provide to its owner. This financial benefit, or future net cash flow, is discounted to see the market value of the company’s equity. Keywords – revenue forecast, cash flow, discount rate, competition, industry situation, necessary investments.

A cost approach to business appraisal is appropriate when the company’s revenue or cash flow is difficult to predict and value calculations cannot be based on it. In this case, the value of all assets is determined, and the amount of the company’s financial liabilities is deducted from it to obtain the value of the equity shares. Keywords – intangible assets, fixed assets, financial assets, composition of inventories, quality of debtors, credit obligations, debt capitalisation.

The comparative approach to business appraisal is based on the performance of similar companies. A disadvantage of this method is the difficulty in obtaining reasonable comparable data. The most popular of these approaches is the multiplier method, where, after obtaining information from the databases available to the appraiser, the turnover or profit indicators are corrected with certain multipliers, thereby calculating the value of the company. This is an informative result as the databases include generalised information on multipliers and are based on large European listed companies. Keywords – sustainable revenue level, stabilised profit, competitor performance, industry deals.

When do you need a business appraisal?

The main task of a business valuation is to study the “health indicators” of the company and its commercial attractiveness. This means that this procedure, as a rule, is of interest to potential investors and managers, owners, or customers.

Usually, the valuation of an existing company takes place at the initiative of top management: the owner, the board of shareholders, and major investors.

It happens in the following cases:

Company restructuring
Preparing for buying or selling
Preparing a company for a takeover
Preparing for the merger
Preparing for a loan
Preparing for placement on stock exchanges
Tax optimisation
Inheritance cases
Liquidation of the company
Bankruptcy of the company

Company valuation is a vital document – it shows what the company’s value will be under specific conditions or requirements. By influencing or changing these conditions, the value of the company changes accordingly. So, the valuation of the company can become the “road map” for the owner/manager of the company, showing what should be done to increase the value of the company.

What is the difference between a business appraisal and an equity appraisal?

Valuation of the company’s business is aimed at determining the total enterprise value, which the business can provide to all the financiers of the company, including long-term creditors and equity funds. Often, when selling a company with bank loans, the buyer pays the total amount for the entire business, while the seller undertakes settlement with the bank itself, so in such cases, the price is not paid for the capital shares, but for the entire business, including the debt obligations to be paid off.

Valuation of equity shares is focused directly on the equity component of the balance sheet; therefore, in such cases, bank liabilities are already deducted in the valuation process, taking into account their conditions and repayment schedule, and the resulting value is only attributable to the shares.

There is a significant difference between the total value of the business and the value of the equity shares, as the equity value of a company with debt obligations will always be less than the total value of the business. If there are no credit obligations, then the total value of the business is equal to the value of the capital shares. Companies need to remember this in purchase/sale negotiations so that the buyer and seller use the same terminology.

For example, if the buyer talks about the total value of the business in the negotiations, but the seller perceives it as the price of the shares, then at the end of the negotiations, after all the research work, the parties will be disappointed, because after deducting the credit obligations from the total value, a significantly lower price for the capital shares will be obtained than initially expected by the seller. So, the deal would fall apart, time and financial resources would be wasted, and a large amount of commercial information about the business would be at the disposal of the potential buyer. This is why we highly recommend the participation of financial professionals in business purchase/sale negotiations to reduce the risk of misunderstandings and to define the “red lines” in terms of price and deal structure at the very beginning of the negotiations.

List of company valuation documents

Why order a business appraisal from us?

We have been offering our clients business appraisals in Riga and throughout Latvia for more than 10 years, and during this time we have gained a reputation as a reliable partner as evidenced by our reviews and client portfolio. By cooperating with us you will get the following:

Quality assurance of business appraisal
Many years of experience of our specialists
Transparency of documents and appraisal methods
Individual approach depending on the situation
Availability of materials
Efficiency and professionalism
Absolute legitimacy certified by licences to engage in this activity

Company equity (business) value calculator *

* – The resulting value is approximate and provides a general insight into the methodology used to calculate the company’s value. If you have any questions or would like to get an accurate assessment, please contact SIA “Interbaltija”

** – The profit here means EBITDA (earnings before interest, taxes, and depreciation)

OBJECTIVE APPRAISAL

Interbaltija appraisal helps in the following situations:

3+ CARD

10% discount with 3+ card for all types of appraisals

10% discount on real estate, movable property, and business appraisals when showing the 3+ Family Card.

SPECIALISTS

Business appraisal specialists

The Interbaltija team consists of experienced professionals who pay heed to the client’s wishes, identify them, and develop strategies and tactics for achieving the set goals.

JĀNIS PINNIS

HEAD OF BUSINESS APPRAISAL DEPARTMENT

CERTIFICATION

Certification of our specialists

Contacts

Contact our team of specialists.

Central office

Ieriķu iela 3, Rīga, LV-1084

Call us

(+371) 67 50 60 70