Determining the true worth of the business is referred to as the business valuation. To get a good business valuation, it is the responsibility of the business owners to contract with some of the professional appraisers so that the opinion can be easily provided and the business valuation can be used for the different planning purposes (Aswath, 2018). In this context, the evaluation and the critical analysis will be made on the company “We Work” which aims in providing shared workplaces for the technological start-ups and the services for the other enterprises. The author’s response to We Work business evaluation is that a lot of money is required to develop a lot more of the office space. For example, allowing the owner is selling the business at a higher sales price or to pay lesser taxes after making the sale of the business or after the owner’s death. In the context of the market value, the goal to value the business needs to be clear and supportable to develop fair market decisions for the business (Teo, 2018).
The thesis statement of the assignment is to review the critical analysis of the two different parts of the book which will help in understanding the exact issue of the business evaluation.
It has been found through the critical analysis that many business owners have a fake idea regarding the worth of the companies and most of them are just mere guesses. Mostly, the market values not got known properly and hence the franchisees or the business heirs pays more than the fair share of the estate taxes. This is the reason, the quality companies with the better rating always tend to get undervalued and accordingly above-average risk-adjusted returns often gets generated out of the fact.
It has been found that, in practice, there exist many problems in the business evaluation purposes due to the existence of the unjustified assumptions of the perfect capital markets. The valuation-related risks have been derived through the risk analysis and the risk aggregation based on which the inconsistent planning has been carried out and there also existed vulnerable stock returns. From the entire analysis, it can be stated that there exist certain unforeseen circumstances which are both positive as well as negative through which the business operations get affected and these things also cannot be predicted well. The reason behind this improper business valuation is the ineffective maintenance and the capabilities through which the current, as well as the projected assets and liabilities, cannot be well organised and accessed. In the context of the business valuations, it has been critically analyzed that expectations are also one of the important aspects to be discussed. This is because they can also be used as a form of the blueprint so that the business maintenance and the planning can be done effectively. Gaining the use of the outdated data entry and as well as the short contracts often gets disturbed like that of the third party or franchise approvals, which is necessary for selling the company.
Aswath, D. (2018). How to Value Growth Companies. Retrieved from How to Value Growth Companies. Retrieved from https://www.informit.com/articles/article.aspx?p=2928207&seqNum=3
Deal, S. (2018). The Difficult Issues Often Attached to Valuing a Business. Retrieved from The Difficult Issues Often Attached to Valuing a Business: https://deal-studio.com/difficult-issues-often-attached-valuing-business/
ecovisdca. (2015). Difficulties in valuing a business . retrieved from difficulties in valuing a business. Retrieved from https://www.ecovisdca.ie/2015/07/28/difficulties-valuing-business/
Jordan, S., & Messner, M. (2019). The use of forecast accuracy indicators to improve planning quality: Insights from a case study. European Accounting Review, 337-359.
Teo, E. e. (2018). Business Valuation. 1st Edition Cengage.
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