The Valuation of Company X as a Going Concern
Ruotimo, Tuomas (2022)
2022
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-202301241609
https://urn.fi/URN:NBN:fi:amk-202301241609
Tiivistelmä
This bachelor thesis presents a company’s valuation as a going concern. Valuation is based on the market approach, where the comparable company method is used to calculate the enterprise value of the commissioning company. The commissioning company is referred to as Company X in this thesis. Company X is a Finnish-based digital service company operating widely in software engineering in the IT industry.
Data for the company valuation is collected from financial statements and interviews with the company management. In addition, comparable companies are chosen from the same industry to enable the use of comparable companies method.
Calculations are done to determine the enterprise value by using value multiples from comparable companies and forecast future growth. In order to do so, the companies’ historical performance is presented and analysed. The analysis of historical performance includes the interpretation of financial statements, such as income statement and balance sheet over the past five years to deeply understand the commissioning company’s financial situation. After that, the financial forecast can be done.
In order to enable comparable companies method, companies from the same geographical location and industry need to be selected and calculate their value multiples from their value drivers, such as revenue, EBITDA, EBIT, and enterprise value. This data is collected from the comparable companies financial statements, which are publicly available because these companies are listed on the stock exchange. The median of the comparable companies is used to finalize the valuation when calculating the commissioning company’s enterprise value.
Data for the company valuation is collected from financial statements and interviews with the company management. In addition, comparable companies are chosen from the same industry to enable the use of comparable companies method.
Calculations are done to determine the enterprise value by using value multiples from comparable companies and forecast future growth. In order to do so, the companies’ historical performance is presented and analysed. The analysis of historical performance includes the interpretation of financial statements, such as income statement and balance sheet over the past five years to deeply understand the commissioning company’s financial situation. After that, the financial forecast can be done.
In order to enable comparable companies method, companies from the same geographical location and industry need to be selected and calculate their value multiples from their value drivers, such as revenue, EBITDA, EBIT, and enterprise value. This data is collected from the comparable companies financial statements, which are publicly available because these companies are listed on the stock exchange. The median of the comparable companies is used to finalize the valuation when calculating the commissioning company’s enterprise value.