Due Diligence and Valuations for Businesses

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What is Due Diligence & Valuation…?

Due Diligence and Valuations for businesses in South Africa are of equal importance. Due diligence allows business owners to make informed decisions by evaluating all relevant information about a product. Valuation services helps the owner determine how much an item is worth. Dream Team Capital offers services for Due Diligence and Valuations for Businesses, in provinces across South Africa!

Due Diligence and Valuations for Businesses

Due Diligence for Businesses

Due diligence usually forms part of risk management functions within entities. It is a pre-emptory act performed to guard against committing an offense by ignorance and potential financial risk. A variety of factors should be considered when performing due diligence on a stock, including company capitalisation, revenue, valuations, competitors, management, and risks.

The compilation of proper records, checks and balances in respect of each business relation or transaction also allows for a smoother running business. It further allows for the proper understanding of the markets that an entity chooses to do business in and allows a company to assess it’s operational requirements in respect of potential risks. Due diligence investigations take around 1-2 months.

Due Diligence may be required when:

•You want to strengthen your company’s core business by acquiring competitor products that are almost identical in function/performance to your own.

•You need to build on your company’s existing activities by purchasing complementary products.

•You want to purchase a company to gain access to its existing products in new markets, or to increase your customer base.

•You need to expand your company’s current portfolio of products and services through the acquisition of new ones – potentially to provide a hedge against the movements in the markets in which the company operates.

•You want to spread your business’s market risk by purchasing a company providing similar products or services in a different country.

Valuations for Businesses

Valuations consider some combination of the market value of assets, current and/or projected revenues and/or cash flow and other barometers of your business’s health. Getting an accurate valuation will provide insight on the functionality and financial value of the business.

A Business may be valued when:

•You want to know your business’s value before selling it;

•You want to gain a better understanding of your business so you can have practical expectations for the selling or buying process;

•You want to find where the strengths and weaknesses lie;

•You want to identify areas that need improvement; or

•You want to determine if its success is sustainable.

Benefits of Valuing a Business include:

•Setting a credible asking price before selling the business;

•Providing information that reassures buyers and reveals ways they can build further value;

•To inform an exit strategy for growing, improving and eventually selling the business;

•Securing capital investment from investors; and

•Setting the price of shares for purchase by employees.

Valuations may be provided for:

•Valuations for transactions, corporate tax, exchange control, capital raising, internal share markets;

•Valuations for public market transactions (independent expert reports);

•Valuations of tangible assets (property, plant & equipment);

•Purchase price allocations and goodwill impairment testing support;

•Employee share option and incentive valuations;

•Litigation support; and

•Assessment of investments in unlisted assets. 

For more information on Due Diligence and Valuations for Businesses contact DTC today!