ValModel

Frequently, chartered accountants are called on by their clients or from an outside referral, to undertake a valuation of either a business or the shares in a company that operates a business.

Historically, there was considerable debate as to whether share valuations were an art or a science. Proponents of the former school claimed that share valuations were possibly the most subjective aspect of a professional accountant’s or merchant banker’s work. Share valuations today are much more scientific.

You cannot get the art right unless you first get the science right.

At valmodel.co.nz, we can relieve you of the “scientific” aspect of a valuation. We will leave the art to you. ValModel utilises a sophisticated valuation model which adopts, in the first instance, an earnings based approach to the valuation.

ValModel is an integrated valuation model in EXCEL comprising 3 distinct but interrelated modules:

Earnings Valuation module which provides reconciled valuations based on either an EBITA, EBITDA or PER approach;
Business Forecast module which forecasts P&L and BS out for 10 years based on optional interpolations of historic data;
DCF Valuation module which provides present value calculations of FCF’s to both Equity and Debt holders and reconciles these to the Earnings Valuations. (a unique feature of the DCF is that it forward adjusts the Cost of Capital to reflect the changing (if any) ratio of debt:equity).

ValModel adopts, in the first instance, an earnings based approach to the valuation but establishes a value range which has integrity across the various earnings methodologies compared to the preferred DCF approach.

Services we offer

There are three options available to you:

Earnings Valuation

A capitalisation of earnings based valuation which relies on an EBITA (EBIT) approach. This is the approach usually relied on for established businesses for which it is possible to assess future earnings based on historic information and future budgets/projections

Business Forecast

The earnings based EBITA valuation extending to a full “Business Forecast’ for up to 10 years.

DCF Valuation

A DCF approach which utilises the 10 year “Business Forecast” and reconciles to the EBITA valuation.

The Cost >>

Value Added Service

Value Drivers

Generally, financial statements prepared by accounting practitioners, for their clients, report only on revenue.

Regular use of ValModel and its updating options, will enable practitioners to offer an extension to this service by reporting also on aspects of value. This enables your client to understand whether or not there has been any increase in the value of the business and possibly, what has to be done to improve this value

Update Option

The roll-forward facility enables the users to update their valuations on a regular basis by having to enter only more recent data. ValModel Limited will maintain a library of all previous valuations so as to be in a position to enable practitioner or user to update at any point in time.

The Process

1Submit

We will first ask you to complete a detail information sheet and provide a copy of the most recent financial statements for the entity you wish to value.

2Customise

We will then revert to you and ask for more information. Using this information we will populate our valuation model.

3Output

We will return to you by email certain outputs from this model, which include basic background calculations along with a number of tables that can be inserted into your valuation report.

4Adjustment

You will likely come back to us with some suggested “changes” based on your own knowledge of the business and the circumstances surrounding the valuation itself.

Full details of the process >>