Most of them wonder why is it necessary to know the value of my company? In a survey conducted by Valoriza over the last 3 years, we found this disturbing figure.
Then why is it necessary to know the value of a company? Many people think that it is something that is only needed at the moment of selling a percentage or the totality of their company, that it is a tool that is used to face an immediate negotiation scenario. Many are unaware that it has multiple other uses, such as:
- Measure the value creation of the company's strategic decisions and define value targets to be achieved.
- Generate incentive plans for key personnel of the company and sale of a percentage or delivery of stock options.
- Prepare the company for a future sale and understand what aspects of the company to improve in order to maximize its value.
- Define its value in the shareholder agreement in the event of departure or death of one of its partners or to resolve disputes and set share purchase and sale values.
- Financing through capital increases in the event that traditional sources of financing are exhausted
Knowing the value of a company is a tool for fundamental in the business environment, and its importance goes beyond the simple sale of a part. This knowledge has a number of key applications that can drive the company's growth and strategic decision-making. Firstly, it enables the measurement of value creation resulting from the company's strategic decisions, which is essential for defining concrete and achievable value targets. In addition, enterprise value is used to generate incentive plans for key personnel, often through the sale of percentages of the company or the delivery of stock options.
Valuation also plays a crucial role in preparing the company for a possible future sale, which may be unexpected, as it provides information on aspects that need to be improved to maximize its market value. In addition, it is essential in situations of shareholders' agreements, such as partner departures or deaths, and for resolving disputes, as it helps to set values for the sale and purchase of shares in a fair and transparent manner.
Another important use of valuation is the possibility of financing through capital increases when traditional sources of financing have been exhausted.
It should also be noted that it is part of the role of company directors to permanently review the value of their companies and their contribution to the generation of value.
In short, knowing the value of a company is not only essential for business transactions, but also serves as a valuable strategic tool for decision making, human resource management and financial planning for the company as a whole.
