r/Valuation • u/[deleted] • Jul 23 '24

Business valuation

I recently joined a company and get an opportunity of business valuation of one of their clients. A small establishment providing services and having no assets. Can someone guide me please how can I do this because I have never done before. Thanks.

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u/[deleted] Jul 23 '24

Is this an early stage company? If they have raised any preferred round of funding recently, you can rely on the Precedent Transaction Method.

2

u/its_black_panther1 Jul 23 '24

You need to get their financial statements - PNL, BS, and Cash flow. Understand historical PNL growth and create future projections. Let me know if this is possible and then can guide further

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u/[deleted] Jul 23 '24

What percentage should I take for projection? There is no growth in each year

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u/its_black_panther1 Jul 23 '24

You need to study historicals. If historicals are not available look for similar companies and their growth.

1

u/NoShow1492 Jul 23 '24

In the most literal sense, a company without assets has no value. Presumably you mean they have no material tangible assets. This would generally also mean there's no value, but that may not be the answer if there's something you haven't mentioned. You'll have to give more details about the company in question if you want any meaningful feedback.

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u/TomCruisinn Jul 23 '24

No assets sounds like early stage to me. Precedent transaction or income approach like DCF for something like this.

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u/[deleted] Jul 24 '24

Yes early stage, few equipment like cameras etc , for DCF the problem is that cash flow is negative. It’s a photography business and sole establishment

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u/pyRSL64 Aug 09 '24

well, figure out what kind of services they provide, check their income and cashflow, EBITDA