Due to the effect of demographical ageing, over the next 10 to 20 years more and more company owners will be aged over 50 years and therefore more likely to sell their companies. This means that around 700,000 companies are likely to change hands over this period. The economic stakes in terms of employment will concern over 300,000 jobs.
Therefore the effective evaluation of companies will become increasingly essential over the coming years. Evaluation provides directors with information on the performance of their companies. Providing warning of any potential reduction of value and implementing a means of yearly company value tracking.
As a result issues relating to the value-assessment of companies will become a key element, requiring the services of accountancy firms that are specialised in the value-assessing companies.
The acquisition, transfer and sale of companies are becoming increasingly common, and the appreciation of the value of a company is an essential part of this process. OSG CONSULTING is the ideal partner for these evaluation processes.
There are two main approaches to assessing the value of a business: the “assets” approach which aims to identify and establish the total value of a company’s assets, and an approach based on the company’s profitability as established from various financial or economic flows. These methods establish a productivity value based on its profits, paid-out dividends and cash flow. Other profitability methods may also be implemented for industrial or commercial companies based on partial account reports such as gross operating profit (EDITDA) or operating income. Between these two models the excess value or goodwill calculation method uses both of these approaches.