How do I value a target company?

There are four main methods used to determine the value of a business:

• Price earnings. This method involves assessing future maintainable after tax earnings using a price earnings ratio that would fit the risk profile of a willing buyer/seller.
• Discounted cash flow. This method calculates the value of the business by discounting the future cash flows by an appropriate discount rate.
• Asset-based. This method values the business based on the fair or open market value of its assets and liabilities.
• Dividend yield. This method calculates the value of the business by assessing the future dividend steam and a dividend yield which would fit the risk profile of a willing buyer/seller.

Contact us

For further assistance in valuing a target company, please contact a member of our Corporate Finance team, email mhcfinfo@mhllp.co.uk or alternatively send us an enquiry online.