Business Valuation in Dubai and UAE
If you are looking to buy, sell or transfer shares in a business in the UAE or elsewhere, it is important to ascertain the right transaction value which is fair and acceptable to all parties. Our business valuation team helps companies and investors in Dubai and other emirates in the UAE in determining the enterprise value and supporting them through the transaction.
Organizations need precision about fair value of its assets or business for a variety of reasons. Whatever the purpose, HLB HAMT believes that valuations are fundamentally the process for updating the decisions you make with what is likely your most important financial asset.
Our approach to valuing businesses is as shown below:
We use different valuation methods and normally, any one of the methods or a combination of these are used based on our judgment and availability of data:
- Income Approach (Discounted Cash Flow Method)
The Discounted Free Cash Flows (“DCF”) technique is one of the most rigorous approaches to the valuation of a business. In this technique, we estimate future cash flows for the businesses, the time frame for these cash flows, and the projected free cash from operations are discounted at the weighted average cost of capital.The sum of such discounted free cash flows combined with other considerations like the perpetuity growth rate of the business and terminal capex helps to arrive at the value of the business.
- Market Approach (Market comparable)
In this approach, data from comparable transactions – ideally within the same sector and the same region is used in order to arrive at valuations that have been obtained for companies. This approach can be used in a stand-alone manner only if there are such comparable transactions that have occurred in the recent past and also if there is reliable data available for these transactions in order to perform a meaningful analysis
- Asset Approach (Net Asset Value)
This approach involves the actual verification of assets in the entity and the computation of the value of these assets. This is applicable when the realizable value of assets is significantly high. We apply this method in the case of asset-heavy valuations and work with qualified technical valuers.
While such techniques provide us with values, we do believe that the real value of an Enterprise can only be arrived at based on various other factors such as the fundamentals of the Business Model, the Management Team, the key Value Propositions that the business offers, its consumer base, etc. Our valuation team hence lays emphasis on understanding the business model and working together with the client management team to validate their strategic business plans as well as the key assumptions and risks involved. This will ensure that the valuation which is arrived is realistic and acceptable to any interested third party.
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