"What is my company worth?" has no single answer. The same company can be expressed with different numbers in a sale negotiation, when taking on a partner, in court and in financial reporting — and all of them can be correct. A valuation does not measure a truth; it produces a defensible range for a given purpose.
This article explains how that range comes about.
When do you need a valuation?
- Before a transaction: company sale, share transfer, taking on a partner
- On ownership changes: new shareholder, partner exit, succession planning
- In funding processes: capital increase, credit application, collateral valuation
- For reporting and compliance: purchase price allocation, impairment testing
- In disputes: shareholder disagreements, litigation
As the purpose changes, so do the method and the assumptions. Before commissioning a valuation, be clear about which question it must answer.
Four core methods
1. Discounted cash flow (DCF)
The company's future cash flows discounted to today. Theoretically the most accurate method, in practice the one demanding the most assumptions. What determines value is not the projection itself but how defensible the assumptions behind it are. A model built on an optimistic growth rate collapses in five minutes opposite an experienced counterparty.
2. Comparable company analysis
Value estimated from the market multiples of similar companies — EBITDA, revenue and earnings multiples. Fast and easy to follow, but whether the "comparable" company is genuinely comparable is critical.
3. Precedent transaction analysis
Multiples from similar completed transactions in the sector. Because it shows what the market has actually paid, it is the most persuasive evidence in a negotiation. The difficulty in Türkiye is that transaction data is mostly not public — which is where visibility earned by working on the transaction side makes a difference.
4. Asset-based approach
The company's net asset value. Particularly meaningful in industrial and natural-resource assets, production facilities and real-estate-heavy structures.
Serious work uses several of these together and presents the result as a range. A valuation report that gives a single number deserves scepticism.
What actually drives value
The methods set the arithmetic; value is determined by the following:
Quality of earnings. Of two companies each earning the same profit, the one selling to two hundred customers is not worth the same as the one selling to a single customer. Recurring profitability, stripped of one-off revenue, is what carries value.
Dependence on the owner. If every customer relationship sits with the principal personally, what exactly is the buyer acquiring? Institutionalisation feeds straight into value.
The cash cycle. A company that looks profitable but collects in 180 days means a permanent working capital burden for a buyer.
Visibility of growth. Contracted future revenue is worth far more than aspiration.
Asset-specific factors. In industrial and natural-resource assets: licence duration and renewability, reserve size and quality, capacity utilisation, logistical position and distance to port or market, and the age of the equipment fleet. A valuation that cannot read these items will misposition an industrial asset badly.
The valuation process
- 01Clarify the purpose. For which decision, and defended to whom?
- 02Collect data. Historical financials, contracts, asset inventory, sector data.
- 03Normalise. Strip one-off income and expenses, bring related-party transactions to market terms.
- 04Model. Apply the methods, run sensitivity and scenario analysis.
- 05Report. The value range, the assumptions, and the conditions under which they change.
Sensitivity analysis is skipped in most reports, yet it is the most useful section: it shows how much value moves when an assumption moves. In a negotiation the other side attacks exactly there.
Frequently asked questions
How long does a valuation take? It varies with company size and data quality, generally measured in weeks. The longest stage is data collection and normalisation.
Is the valuation I gave the bank the same one I use in a sale? Usually not. The purpose, the audience and the assumptions differ.
Does commissioning a valuation commit me to selling? No. On the contrary, knowing your own number before an offer arrives is the strongest negotiating position there is.
Does a loss-making company have value? Yes. Assets, licences, market position and turnaround potential all carry value. What a loss-making asset means to the right buyer is a separate question.