On the "accuracy" and reliability of the results of determining the fair value of economically significant enterprises. The capital market method is based on the valuation of minority stakes More reliable data on the value of the enterprise if it is a recent start-up and

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1. When analyzing expenses in the discounted cash flow method, one should take into account:
2. What method is used in business valuation when the value of the enterprise in liquidation is higher than that of the current one?
3. Does the size of the enterprise affect the level of risk?
4. The profitability of a business can be determined using:
5. The appraiser indicates the date of appraisal of the object in the appraisal report, guided by the principle:
6. What valuation multiplier is calculated similarly to the price of a unit of income?
7. The "presumed sale" method is based on the following assumptions:
8. Which method will give more reliable data on the value of an enterprise if it has recently emerged and has significant tangible assets?
9. The value of the object of appraisal, determined on the basis of its profitability for a specific person, is the value of:
10. If the discounted cash flow method uses debt-free cash flow, then investment analysis examines:
11. Risk due to factors internal environment called:
12. What method can be used to determine the value of a minority stake:
13. What evaluation method is used to evaluate the results of business restructuring?
14. For a debt-free cash flow, the discount rate is calculated:
15. Is the statement true: for cases of increasing cash flows over time, the capitalization ratio will always be greater than the discount rate?
16. To determine the value of a non-controlling interest open company it is necessary to deduct the discount for non-controlling nature from the cost of the controlling stake:
17. When the growth rate of the enterprise is moderate and predictable, then the following is used:
18. What is the method of transactions based on:
19. What components does it include investment analysis for cash flow model calculations for equity?
20. Shares valued at market value are almost always:
21. Which of the following is not a cost standard:
22. Multiplier is the ratio between the sale price and some financial indicator
23. Market value can be expressed in:
24. The discount rate is:
25. Calculation residual value needed in:
Tasks

1. It is known that the company's income in the last forecast year will be 650,000, the discount rate is 20%, and the long-term growth rate is 110%. Determine the residual value. Specify a solution.
2. It is known that the current assets of the enterprise are 200,000 at the beginning of the period and 270,000 at the end, the amount of assets is 700,000, revenue is 1,300,000. Determine the turnover current assets, in days. Specify a solution.
3. It is known that the company's income expected to be received in the forecast period is 750,000 in the 1st year, 350,000 in the 2nd year, 500,000 in the 3rd year, and 550,000 in the 4th year , residual value - 1200 000, discount rate - 8%. Determine the current value of the enterprise. Specify a solution.
4. It is known that the average value of the price / profit multiplier for several companies - analogues is 6.5; profit of the company being valued 80000; revenue 1000000. Determine the value of the company being valued. Specify a solution.
5. Determine the value of the enterprise using the income approach, if it is known that the income in the first forecast year was CU 300,000, in the second - CU 550,000, in the third - CU 700,000, long-term growth rate of cash flow 5%. In addition, it is known that the risk-free rate of return is 12%, the coefficient is 0.9, and the market premium is 5%.
Specify a solution.

1. When analyzing expenses in the discounted cash flow method, one should take into account:
2. The cost of the appraisal object in case the appraisal object must be alienated within a period less than the usual exposure period of analogues is:
3. Does the size of the enterprise affect the level of risk?
4. The appraiser indicates the date of appraisal of the object in the appraisal report, guided by the principle:
5. The "presumed sale" method is based on the following assumptions:
6. What method will give more reliable data on the value of an enterprise if it has recently emerged and has significant tangible assets?
7. If a debt-free cash flow is used in the discounted cash flow method, then investment analysis examines:
8. What is the capital market method based on:
9. Which of the following methods are used to calculate the residual value for a going concern?
10. For a debt-free cash flow, the discount rate is calculated:
11. Is the statement true: for the case of a stable level of income for an unlimited time, the capitalization ratio is equal to the discount rate?
12. When the growth rate of the enterprise is moderate and predictable, then the following is used:
13. What method can be used to determine the value of a non-controlling stake:
14. Transformation of reporting is obligatory in the process of assessing an enterprise.
15. For cash flow for equity, the discount rate is calculated:
16. Is it necessary for the appraiser to analyze the financial condition of the enterprise:
17. In determining the market value, the market should be understood as:
18. To determine the value of a smaller share in a closed company, it is necessary to subtract a discount for insufficient liquidity from the value of the controlling stake:
19. What are the components of an investment analysis for calculating the cash flow model for equity?
20. The lack of what approach in business valuation does the Edwards-Bell-Ohlson model eliminate?
21. The multiplier is the ratio between the sale price and some financial indicator:
22. Business is:
23. The discount rate is
24. Normalization of reporting is carried out in order to:
25. The calculation of the residual value is necessary in:

1. It is known that the current assets of the enterprise are 200,000, the amount of assets is 700,000, borrowed capital 300,000. Determine the autonomy factor. Specify a solution.
2. It is known that the company's income expected to be received in the middle of each year is 300,000 in the 1st year, 400,000 in the 2nd year, and 350,000 in the 3rd year; discount rate - 8%. Determine the present value of the cash flows. Specify a solution.
3. The price of the company's equity capital is 7%, borrowed capital is 10%, the share of borrowed capital in the entire capital of the company is 50%. Determine the weighted average cost of capital. Specify a solution.
4. Determine the value of the enterprise using the income approach, if it is known that the income in the first forecast year was CU 300,000, in the second - CU 550,000, in the third - CU 700,000, long-term growth rate of cash flow 5%. In addition, it is known that the risk-free rate of return is 12%, the coefficient  is 0.9, and the market premium is 5%.
Specify solution:
5. Determine the value of the enterprise using a market approach, if it is known that the price / profit multiplier for peer companies was 6.3; price/cash flow 10.5; price/revenue 4.3. The entity being valued is unprofitable with revenues of CU1,200,000 and cash flow of CU200,000.

technical and operational qualities of an object under the influence of natural factors and human activity is called:

a) physical wear and tear;

b) functional wear;

c) external (economic) wear and tear.

79. Bringing the future value of a monetary unit to the current moment in time is:

a) discounting;

b) annuity;

c) comparison.

80. Does the size of the enterprise affect the level of risk:

81. Risk due to factors external environment called:

a) systematic;

b) non-systematic;

c) another answer.

82. For a debt-free cash flow, the discount rate is calculated:

83. When the growth rate of the enterprise is moderate and predictable, then the following is used:

a) discounted cash flow method;

b) income capitalization method;

c) net assets method.

84. What components does the investment analysis include for calculations under the cash flow model for equity:

a) investment;

b) increase in own working capital;

c) demand for products.

85. Which of the following is not a cost standard:

A) market price;

b) fundamental value;

c) salvage value.

86. Which method will give more reliable data on the value of an enterprise if it has recently arisen and has significant tangible assets:

a) salvage value method;

b) the net asset value method;

c) income capitalization method.

87. For a debt-free cash flow, the discount rate is calculated:

a) as the weighted average cost of capital;

b) the method of cumulative construction;

c) using the capital asset valuation model;

Which of the statements does not correspond to the legally established concept of the market value of the appraised object?

a) the payment for the valuation object is expressed in cash or in kind;

b. the parties to the transaction are well aware of the subject of the transaction and act in their own interests;

V. one of the parties to the transaction is not obliged to alienate the object of evaluation, and the other party is not obliged to accept the performance.

89. If the calculation of the value of the business is carried out for the purpose of concluding a sale and purchase transaction, then the following is calculated:

A. investment value;

b. the cost of replacing the object of assessment;

V. market price;

d. salvage value.

90. Consumers of the evaluation results may be:

A. only customer evaluation;

b. any participant appraisal activities;

V. bodies executive power;

d. the owner of the property being valued.

What document is the basis for business valuation?

A. license;

b. agreement;

d. certificate;

e. order.

At what stage should the appraiser consider the inflation rate and the company's market share?

A. determination of the discount rate;

b. retrospective analysis and forecast of gross proceeds from sales;

V. calculation of the value in the post-forecast period;

d. choice of cash flow model.

At what stage should the appraiser determine depreciation deductions, based on the current availability of assets and on the future of their growth and disposal?

A. analysis and forecast of expenses;

b. analysis and forecast accounts payable;

V. determination of the duration of the forecast period;

d. making final amendments.

94. The formula below calculates:

WACC= kd ( 1 − t)Wd+ ksws+ kp wp

A. the share of borrowed capital in the capital structure of the enterprise;

b. cost of attraction share capital(preference shares);

V. weighted average cost of capital;

d. the share of ordinary shares in the capital structure of the enterprise;

e. the cost of raising equity capital (ordinary shares).

Company valuation is necessary in the most different situations when: buying an enterprise or a large block of its shares, attracting investors, analyzing the quality of management, obtaining loans. The economic literature describes in detail the existing methods for assessing the value of a company, however, in their practical application, serious mistakes are often made that entail negative consequences. In this article, we will look at the most common mistakes in estimating the value of a company, as well as ways to minimize them.

Wrong choice of approach to valuation

In world practice, there are three main approaches to determining the value of a company: profitable, comparative and costly. Each of them is based on different points of view on the formation of business value. Results from these approaches are reconciled by calculating a weighted average. At the same time, the greatest weight should be assigned to the approach, the application of which uses the most complete and reliable information.

Example 1

Let's assume that to estimate the cost holding company"X" as the main approach was used income approach. The activity of this company is to manage blocks of shares. The bulk of revenue is generated by individual manufacturing companies included in the holding. At the same time, the predominant part of their net profit is reinvested. As a result of the activity, the income of the parent company turned out to be small, which affected the result of applying the approach. Since this approach was used as a priority, the calculated value of the company turned out to be underestimated.

To avoid errors in the calculation of the value of companies, it is necessary to take into account the compliance of the approaches used with the objectives of the assessment and the degree of reliability of the information used in each of the approaches.

First of all, when choosing a priority approach, one should take into account way to benefit the owner of the business. If the owner makes a profit directly from the sale of goods or services, then the income approach will be a priority. For asset management companies, as in the example above, it makes more sense to use cost approach.

By using income approach it is possible to justify the value of the business, but not to carry out its initial assessment, which is discussed in the negotiation process. Cost approach also does not allow to determine the exact amount, since the cost of most assets is understated relative to the cost of creating similar assets. Comparative approach it is preferable when evaluating enterprises, transactions with shares or shares of which are regularly made on the exchange or over-the-counter market. However, it is also very prone to errors when using it. The fact is that each business has many unique characteristics, so complete and reliable databases of real sales are needed, which most appraisers do not have.

Each activity should use any of the above principles for choosing one or another approach to estimating value, except for those that obviously cannot be applied in specific conditions. At the same time, the following should be recognized: in practice, priority is given to data obtained using the income approach (in the market ready business the investor pays for the income).

Note. The underlying market information used in each approach does not correlate with the underlying market information used in the other approaches, and therefore each approach produces a unique result.

Mistakes when using the income approach

Often in our country, the income approach is applied incorrectly. The main difficulty in using this approach lies in the fact that enterprises apply various schemes for minimizing tax liabilities, as a result of which the enterprise's reporting does not reflect its actual financial position. Almost every company has certain ways of avoiding taxes, which are problematic to take into account when assessing. When analyzing the income of an enterprise, first of all, it is necessary to find out the real price of selling products that are not included in the balance sheet, and when analyzing expenses, take into account the actual cost of acquiring raw materials and materials, as well as the real wages. In this case, the accuracy of the estimate will depend on how well the appraiser understands the status quo. Therefore, it will be beneficial for business owners to provide the appraiser with additional information that goes beyond the official one. Otherwise, the value of the company will be significantly underestimated.

The value of the company determined by the income method, shows how much the buyer will have to pay so that the income from the transaction is equal to his costs. This amount is the upper limit from which to trade. When calculating the final price, the reasons why the enterprise may not reach this limit are discussed, and depending on the significance of these reasons, the price is reduced.

The income approach cannot be applied to unprofitable enterprises. Exceptions can be:

• new companies, which are sometimes valued using profit forecasts;
• unprofitable enterprises, considered taking into account the benefits that a specific investor can receive from their ownership (synergy effect, more rational use of certain assets, etc.).

It should be borne in mind that the assessment using the income approach is carried out on the basis of not only the income of the enterprise, but also other economic benefits received by the owner from owning the business.

In addition, in practice, problems often arise related to the calculation of the cost of a business. discounted cash flow method. Many companies around the world, due to the lack of complete information use a simplified version of the cash flow calculation, which leads to a distortion of the estimate. For example, a company's cash flow is often taken as the amount of its net profit after tax and accrued for certain period depreciation. At the same time, the need to finance the company's current assets may not be taken into account, capital costs are forgotten, and atypical one-time income and expenses that arose in the current period may be included in profit, which generally distorts the amount of cash flow and the valuation result.

Measure a business with a metric reduced net income possible, but not in every industry. For example, in the jewelry industry, the amount of working capital is twice the amount of capital investments, and if you do not take into account the change in working capital in the company's cash flow, then you can get a result that is far from the real one. However, when calculating the future value of, for example, a consulting company, a simplified approach may be justified.

Thus, when calculating the value of a company using the discounted cash flow method, it is necessary to strictly follow the method of calculating cash flow accepted in international financial practice. If it is impossible to obtain reliable information about all components of the company's cash flow, other approaches to valuation should be used, for example, comparative.

For your information. The availability of information on the structure of the cash flow of peer enterprises can help calculate the approximate amount of cash flow for the company being valued.

Very often in valuation practice there are errors associated with incorrect forecasting of future cash flows. Often, when forecasting revenues, business salespeople tend to talk about high sales growth rates, keeping silent about the fact that the company has poorly developed strategy, marketing and assortment management. In addition, companies with a pronounced seasonality of activity may either underestimate or overestimate their need for working capital in separate periods. This is due to the fact that to calculate the change in the need for financing the production and financial cycle, balance sheet data at the beginning and end of the financial year are used. Meanwhile on new year holidays and periods of summer holidays in many sectors of the consumer market, there are recessions or, conversely, peaks of activity. Accordingly, the levels of inventories, receivables and payables during this period are not representative of the normal state of their business.

To avoid errors in the calculation of the forecast cash flow, it is necessary to check the forecasts of the state of the markets in which the company operates. The volume of income planned to be received in future periods must be clearly related to reasonable ideas about the volume of sales and the level of prices for the relevant products (services) in these periods. expedient building a scenario forecast of income. If the business of the company being valued is subject to strong seasonal fluctuations, then it is recommended to evaluate the change in the need for financing the production and financial cycle on a monthly basis.

Mistakes when using a comparative approach

Comparative approach- This general way determining the value of the company and (or) its equity, which uses one or more methods based on a comparison of this company with similar investments already sold. This approach includes the capital market method, the transaction method and the industry coefficient method.

Comparative approach is a procedure for comparing actual sales of similar properties that have taken place.

This assessment approach is based on principle of substitution, according to which, in the presence of several goods or services with relatively equal consumer value (utility), the most common and in demand will be the product with the lowest price. The comparative approach is based on the collection of information about similar offers and sales for subsequent comparison, which allows you to determine the necessary market adjustments for significant factors. Sales information is compared with the object under consideration according to the essential characteristics identified in this object. The peculiarity of applying this approach to enterprises is that when buying and selling a company, the buyer receives a minimum of information about the transaction. Accordingly, even if the value of the sold analogue enterprise is known, it is difficult to say what specific factors formed it, whether there were any “pitfalls” and mutual obligations of the seller and buyer hidden from prying eyes. Also, this approach has limited application due to the uniqueness and specifics of enterprises. The problem is that, unlike most other products, an enterprise cannot be accurately compared - revenues depend on the unique characteristics of the company, few companies have enough common economic features.

We have to admit that it is especially difficult for businesses to find relevant information about the cost of an analogue. Estimating the value of your business by the sale price of a similar neighboring business, it is easy to make a mistake. Even if the transaction price and total sales are known, other key data (such as the level of profitability of the business) are often not available. And small variations of this indicator can significantly change the final price.

Comparative Approach to Valuation involves multiplying certain indicators of peer companies (sales volumes, profits, net assets or non-financial performance indicators) by a certain multiplier that reflects the ratio between the indicator under consideration and the value of the company. The multiplier can be industry-specific or calculated for individual peer companies.

Note. Currently, the owners of domestic companies often use multipliers used in Western markets. But, as the experience of domestic appraisal firms shows, they do not work in Russia.

For example, the value of telecommunications companies can be determined based on data on the number of telephone lines owned by the company. While cellular companies when buying operators mobile communications First of all, the number of acquired subscribers is taken into account.

Example 2

One of the existing Russian market mobile operators as the main characteristic of the company's valuation widely uses such an indicator as the cost of one subscriber (the amount of the transaction per one subscriber by the acquired company). The motivation for using this indicator is as follows. Firstly, the indicator is simple and convenient, and secondly, it reflects the structure client base cellular companies, which is fairly homogeneous and overwhelmingly consists of individuals. In addition, the cost of connecting a subscriber to a mobile operator is the same. While the client base of wireline operators is much more heterogeneous. Here, the main subscriber and the main source of income is business sector. In addition, the cost of connecting a subscriber seriously depends on his location, connection method, etc. So, in order to connect new district(if we are talking about the residential sector), it is necessary to lay several kilometers of cable, install a station, build a distribution network, negotiate with the developer, etc. Therefore, such an indicator as the cost of one subscriber is much less suitable for characterizing the acquisitions of wired telecom operators. In order to realistically evaluate acquisitions of wireline operators, it is necessary to take the discounted cash flow method as a basis and be based on a business model designed for 5-10 years.

As part of comparative method the main industry multipliers are estimated: annual profit, capacity for the production of finished products, revenue. Then the estimate obtained using the multiplier is adjusted for certain premiums (discounts) behind:

• the urgency of the transaction;
• company's opacity (highest);
• quality of management;
• geographical position;
• marketing positions;
• legal structure.

To assess premiums (discounts), lawyers, tax consultants, that is, specialists in specific risks, are hired. As a result of the correction, the final price may differ from the original one by more than 20%.

Example 3

Suppose a decision is made to use the comparative approach to assess the value of small businesses (less than $500,000). At the same time, the appraiser has at his disposal a detailed database that includes information (on more than 350 such companies) that have changed their owners over the past three years. This approach will give good results: in 80% of cases, a business is sold for a certain price. However, if there are less than 100 analogues in the database, it does not make sense to use it. In this case, the error rate is too high.

The selection of a suitable analogue for a medium-sized and non-public company is a problem in developed markets as well. outside stock market the information is fragmentary, it is really possible to use information about 5-6 acquisitions. Based on the obtained price multiplier, the exact value of the company can be estimated at a stretch. So you can get only a general idea of ​​the order of its values.

Note. The comparative approach can be used only by those companies that have extensive experience in selling existing companies (and only to determine the payback period of investments).

Thus, in order to avoid errors when using a comparative approach, it is necessary to assess the homogeneity of the industry in terms of the size of enterprises, their technical equipment and financial condition. When choosing indicators for comparison, you need to check whether there is a connection between them and the capitalization of companies in the industry or their selling prices (according to data on completed transactions).

Mistakes when using the cost approach

Cost approach(asset-based) - a general method for determining the value of an enterprise and (or) its equity, which uses one or more methods based directly on the calculation of the value of the company's assets less liabilities.

Valuation using the cost approach involves the use of various methods:

• comparative unit cost method- valuation of property based on the use of single adjusted aggregated cost indicators for the creation of analogues. Its essence is as follows: for the object to be evaluated, an analogue object is selected that is very similar to the object being evaluated in almost all characteristics, materials used and manufacturing technology. The cost of a unit of measurement of an analogue object is multiplied by the number of units of the object being evaluated;
• lumped element cost method is to evaluate the property based on the value of the cost of creating its main elements. The method uses data on the cost of various elements, that is, the components of a building or structure (element costs). The calculation of elemental costs includes, for example, the breakdown of the building into its component parts, the establishment of the average cost for these parts;
• method quantitative analysis consists in evaluating the object on the basis of a full estimate of the costs of its reproduction. For example, the cost of construction is determined by summing up all the costs of erecting or installing the components of a building (in this case, indirect and direct costs must also be taken into account). In order to apply this method, it will be necessary to compile a list of all materials and equipment, calculate the labor costs required to install each element, take into account indirect, overhead costs and the developer's profit.

In practice, when applying quantitative analysis method errors may occur due to incorrect selection of data on the cost of units of comparison in buildings that do not correspond to the type of the object of assessment. This method is quite laborious, its application is based on compiling a list of all materials and equipment, calculating the labor costs required for the installation of each element, which requires the involvement of qualified estimators;

• index method consists in determining the replacement cost of the object being valued by multiplying the book value by the corresponding revaluation index. Indexes for the revaluation of fixed assets are approved by the Government of the Russian Federation and are periodically published in the press.

The main feature of applying the cost approach for enterprises is that the book value of the company's assets and their actual value are very different. Therefore, when analyzing assets, it is necessary to evaluate them at market value. As a rule, this significantly increases the value of assets. First of all, it concerns machinery and equipment. In many small companies, a significant amount of fully functional equipment has zero residual value, and the market value of this equipment can be quite significant. When analyzing inventories, it is necessary to discard their illiquid part, and when evaluating accounts receivable, it is necessary to discard the bad part.

Valuation Reliability costly approach largely depends on the completeness and reliability of economic information from the sub-sector to which the object being assessed belongs (the economic structure of prices for the products of the sub-sector, the prevailing indicators of profitability of sales, some cost standards, etc.).

Errors when calculating discounts

By purchasing less than 100% of the shares, the owner receives a certain amount of rights (property rights and rights to manage the company), which is limited compared to the rights of the sole owner of the business. This means that the buyer does not have full control over the business, so he has the right to demand a reduction in the price of such a package compared to the value of 100% of the company's equity. In this regard, when calculating the value of shareholdings, a discount for an insufficient degree of control is applied.

The reason for applying the allowance for insufficient liquidity is high risk failure to receive dividends and other income from the ownership of securities (shares), caused by internal problems of the company or the state of the industry.

It is difficult to accurately determine the size of such discounts, since full information about the level corporate governance companies and policies regarding minority shareholders are not always available.

When selling non-controlling stakes on the open market (a ready-made business market that uses non-fund mechanisms for the alienation of companies), the discount can be very large - up to 90%. For this reason, it is recommended that either the entire business or a controlling stake be put up for sale. Otherwise, the probability of a successful search for a buyer is very small.

It is important. When preparing transactions related to the purchase and sale of blocks of shares (stakes in authorized capital) of the company, it is necessary to analyze in detail the restrictions on the rights of the owner of such a package, determined by law and the charter of the company.

Significant attention should be paid to the analysis of the possibility of selling a block of shares. It is necessary to check the presence of transactions with the shares of the company in the existing trading systems, evaluate the potential attractiveness of shares or shares in the OTC market, as well as the transparency of the corporate governance system and the risk of non-receipt of income. Based on the results of the analysis, it is advisable to determine acceptable discounts for insufficient liquidity and the degree of control in this case. Moreover, in the practice of valuation activities, such discounts are applied sequentially: first, a discount for control, then - for insufficient liquidity.

There are certain levels of control: if 75% (or more) of voting shares are purchased, then the buyer acquires virtually complete control over the situation in the company and discounts are hardly appropriate. The second level (25%) is a blocking stake, which makes it possible to reject decisions that do not suit. In our opinion, if we are talking about buying a stake in excess of 25%, the discount will be very small or not at all.

Currently, there is no common method for calculating the discount. Preferred shares, as well as small blocks of shares that do not give the opportunity to vote and are less liquid, should be traded at a discount of 20-25% (excluding dividends in the value of the package). But since the dividend yield on common and preferred shares is different, this discount needs to be adjusted. The amount of the adjustment is determined as the difference between the dividend yields of preferred shares and ordinary shares times four (assuming the expected difference continues in the coming years). This premium will partially offset the discount associated with insufficient liquidity and control.

You should also pay attention to what packages other shareholders have. If there are no owners of more than 25% of the shares among them and the probability of their occurrence is low, there is no reason for concern.

Another issue that needs to be addressed is company reputation. In Russia, one can already quite clearly understand which companies recognize the rights of minority shareholders and which do not.

Let's consider the mistakes that often occur when estimating the value of small companies.

Mistakes in valuing small companies

This type of error can be divided into three groups.

The first group of errors related to the nature of enterprises. For example, small companies are owned by a fairly narrow circle of people who are often united either by relatives or friendly relations. This circumstance can be decisive in building a business management system and its reporting. Such enterprises suffer from the lack of many documents that allow them to evaluate their real profits, do not have strategic development plans, and such companies do not even need to disclose objective information about their activities.

The actual results of the enterprise are reflected in its management reporting. Business brokers are oriented to its data in their valuation activities. From positions Russian legislation an assessment carried out in this way cannot be considered fully legitimate:

• Firstly, the consulting company acts as an interested person: it determines the price for which it is really possible to sell the business;
• Secondly, most entrepreneurs are not interested in voicing information about their real income.

Therefore, the results of the assessment and the indicators on which it is based are referred to in the conclusions of business brokers only as an expert opinion.

Since the value of a business is based on how much profit it can generate under potential buyer, accurate prediction becomes hypothetical. Small companies as profit producers are exceptionally unstable. Therefore, there are no guarantees that the business will develop and function successfully when the owner changes. In practice, there are many examples of the fact that sales and revenues of the company increased several times after the change of owner-manager. And sometimes you have to admit that in the past successful companies are failing.

Note. Business brokers value an enterprise at present use, taking into account the revenue it generates here and now (this figure is discounted). At the same time, the company's prospects are taken into account, but only as one of the factors affecting its value.

The second group of errors arising in the evaluation of an existing business is due to an attempt to apply some popular formulas to this process. Here the most common are: error types:

• mismatch error- dangerous due to the fact that many experts consider this method the most convenient for assessing existing enterprises. The problem is that, unlike most other goods, a business as an object of sale cannot be exactly compared - revenues depend on the unique characteristics of the company, few companies have a sufficient number of common economic features;
• odds error- entered into domestic practice from Western textbooks, the methods described in which are rarely applicable in Russian conditions. For example, some English consultants propose to determine the cost of a supermarket according to the scheme "the cost of existing inventory+ monthly sales. The cost of a cafeteria and a small restaurant in the US is usually equal to 3-4 months of sales. However, in Russia, business profits are not directly dependent on turnover (this indicator is individual for each enterprise).

Currently, the development of the main coefficients that can be used in business valuation is underway. This is one of the factors that can confirm the correctness of the valuation of the company, carried out by the income method;

• addition error- occurs when the value of a company is determined as the sum of the values ​​of its assets. The difficulty here arises when assessing goodwill - an intangible asset that can be the most valuable of all the components of the enterprise's property. The inapplicability of this approach can be illustrated by the example of enterprises that represent "cash flow". Let's say one of the largest Russian sellers of equipment for office printing is put up for sale. The value of its assets is rather low, but the availability of exclusive distribution rights for the products of leading Western manufacturers and a permanent client base makes the company's value ($450,000) quite consistent with the requirements of investors. If the company put up for sale owns real estate, the latter is valued separately. This indicator added to the value of the business income method. This is explained by the fact that real estate currently acts as a highly liquid asset. A similar scheme is used if the company being sold owns expensive high-tech equipment. In addition, a similar model is used in the sale of trading companies with significant volumes of commodity balances. This raises the question of determining their liquidity. Therefore, one has to resort to the use of certain coefficients.

TO third group of errors only one applies fallacy of subjectivity(occurs most often). A small business is often a kind of extension of its owner, experiencing a certain emotional attachment to him, which makes it difficult to objectively assess the company and leads to overpricing. Often the seller includes non-economic factors in the value of the business: his own, not confirmed by any figures, idea of ​​the company's place in the market, his expectations for the future, etc. Therefore, the seller this business do not try to determine its final cost yourself. Timely appeal to specialists will allow you to carry out the sale more efficiently and avoid disappointments in the process of finding an investor.

Summary

In conditions of financial instability in the market, it is becoming increasingly difficult to assess the value of a business. Existing methods are far from perfect, so financiers have a lot of problems associated with the evaluation process. Using the accumulated experience and own practice in company valuation, you can significantly reduce the risk of errors in the future.

AUTONOMOUS NON-PROFIT EDUCATIONAL ORGANIZATION

HIGHER PROFESSIONAL EDUCATION

« INDUSTRIAL INSTITUTE »

Department of real estate valuation

EXAM MATERIALS FOR THE DISCIPLINE

«BUSINESS VALUATION AND FIRM VALUE MANAGEMENT»

Department of real estate valuation,

Head department ___________/A.A. Belan /

APPROVE

Reviewed and approved at the meeting

Department of real estate valuation,

economics and finance,

Protocol No. ___ of "_____" __________ 201_

BUSINESS VALUATION AND VALUE MANAGEMENT EXAM QUESTIONS

1 Business, enterprise, firm, capital as objects of assessment.

2 Features of business, enterprises, firms as objects of assessment.

3 Subjects of assessment. The need and purpose of business valuation.

4 cost. Types of value determined in the evaluation. Factors affecting the estimated value.

5 Principles of business valuation.

6 Approaches and methods used for business valuation.

7 Time estimate of cash flows. The main functions of the monetary unit and their economic meaning.

8 Provisional valuation of money capital. Turnover functions of the monetary unit and their economic meaning.

9 System of information used in the evaluation process. Requirements and organization of information. Internal information required for the assessment and its main sources.

10 External information needed for the assessment and its sources.

11 Inflationary adjustment of reporting under evaluation. Purpose, methods of correction.

12 Normalization of financial statements in the evaluation process. The purpose and directions of the normalization of financial documentation.

13 Transformation of financial statements.

14 Calculation of relative indicators in the evaluation process. Main groups of indicators.

15 The essence of the income approach to the valuation of an enterprise (business) using the discounted cash flow income approach.

16 Cash flows. cash flow models. Determining the duration of the forecast period.

17 Retrospective analysis and forecast of gross sales proceeds. Analysis and forecast of expenses and investments.

18 Methods for calculating the amount of cash flow for each year of the forecast period.

19 Discount rates. Methods for determining the discount rate. Calculation of the current values ​​of future cash flows in the forecast period. Making final amendments.

20 Economic content of the profit capitalization method of the income approach and the main stages of its application. Analysis of financial statements.

21 Capitalization rate and models for its calculation.

22 General characteristics of the comparative approach to business valuation and its basic provisions. The main methods of business valuation by a comparative approach.

23 Basic principles for selecting enterprises - analogues in business valuation by the company - analogue method (capital market method). Distinctive features of financial analysis in a comparative approach.

24 Characteristics and calculation of price multipliers when evaluating a business using the analogue company method (capital market method).

25 Business (enterprise) valuation using the transaction method and the industry-specific method.

26 The essence of the cost approach in business valuation. The main methods of the cost approach. Stages of calculating the value of a business (enterprise) using the net asset value method.

27 Determination of the fair market value of the company's real estate using the income approach.

28 Determining the reasonable market value of real estate using a comparative (market) approach.

29 Determining the reasonable market value of real estate property using the cost approach.

30 Assessment of the market value of land. Essence, methods.

31 Valuation of the market value of machinery and equipment using the cost approach.

32 Assessment of the market value of machinery and equipment by a comparative (market) approach.

33 Valuation of the market value of machinery and equipment using the income approach.

34 Valuation of intangible assets and their group. Essence, features.

35 Application of the income approach in the valuation of intangible assets.

36 Application of the cost approach in the valuation of intangible assets.

37 Assessment of the market value of financial investments: bonds, shares.

38 Evaluation of inventories, deferred expenses, receivables, cash.

39 Scope of the salvage value method. Stages of liquidation value calculation.

40 Valuation of controlling and non-controlling interests.

41 Report on the assessment of the business of enterprises and the requirements for it.

APPROVE

Reviewed and approved at the meeting

Department of real estate valuation,

economics and finance,

Protocol No. ___ of "_____" __________ 201_

Head department ___________ / A.A. Belan /

TESTS FOR FRONTIER CONTROL FOR THE DISCIPLINE BUSINESS EVALUATION AND COMPANY VALUE MANAGEMENT

1 option

1. When analyzing costs in the DCF method, the following should be taken into account:

a) inflation expectations for each category of costs;

b) prospects in the industry, taking into account competition;

c) interdependencies and trends of past years;

d) the expected increase in product prices;

2. The cost of the appraisal object in case the appraisal object must be alienated within a period less than the usual exposure period of analogues is:

a) replacement cost;

b) salvage value;

c) book value;

d) investment cost;

e) disposal cost.

3. Does the size of the enterprise affect the level of risk?

4. The appraiser indicates the date of appraisal of the object in the appraisal report, guided by the principle:

a) compliance;

b) utility;

c) marginal productivity;

d) changes in value.

5. The method of "proposed sale" comes from the following. assumptions:

a) in the residual period, the depreciation and capital investments are equal;

b) in the residual period, stable long-term growth rates should be maintained;

c) the owner of the enterprise does not change;

6. Which method will give more reliable data on the value of an enterprise if it has recently emerged and has significant tangible assets?

a) salvage value method;

c) income capitalization method.

7. If the discounted cash flow method uses debt-free cash flow, then investment analysis examines:

a) capital investments;

b) net working capital;

c) change in the balance of long-term debt;

8. What is the capital market method based on:

a) under evaluation minority stakes shares of peer companies

b) on the evaluation of controlling stakes in companies-analogues;

c) on the company's future earnings.

9. Which of the following methods are used to calculate the residual value for a going concern?

a) the Gordon model;

b) the "presumed sale" method;

c) by the value of net assets;

10. For a debt-free cash flow, the discount rate is calculated:

a) as the weighted average cost of capital;

b) the method of cumulative construction;

c) using the capital asset valuation model;

11. Is the statement true: for the case of a stable level of income for an unlimited time, the capitalization ratio is equal to the discount rate?

12. When the growth rate of the enterprise is moderate and predictable, then the following is used:

a) discounted cash flow method;

b) income capitalization method;

c) net assets method.

13. What method can be used to determine the value of a non-controlling stake:

a) the method of transactions;

b) the net asset value method;

c) the capital market method.

14. Transformation of reporting is mandatory in the process of assessing an enterprise.