You build your business from scratch. You spend years fixing problems and serving clients. You sacrifice weekends. You take risks. You build something of value. But you do not know the price of what you built. Most business owners do not know the true value of their company. They guess. 

They look at revenue and multiply it by an arbitrary number. They listen to rumors about what a competitor sold for. This is dangerous. You leave money on the table. You risk making bad decisions based on wrong data.

You need a number. You need a defensible, accurate calculation of your business worth. This process is business valuation. It determines the economic value of your owner's interest. It is not a guess. It is a science. It requires analysis of your assets, your future earnings, and the market.

Business valuation in Nepal is evolving. The market is maturing. Investors demand better data. Banks require rigorous analysis. Partners want transparency. You cannot rely on back-of-the-napkin math anymore. You need professional guidance. 

You might think you only need a valuation when you sell. This is wrong. You need it for many reasons. 
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‍Buying or Selling a Business 

‍This is the most obvious reason. You want to sell your company. You need to know the asking price. If you price it too high, you scare away buyers. If you price it too low, you lose money. A professional valuation gives you a realistic range. It gives you leverage in negotiations. You show the buyer the math behind the price. It builds trust.

‍Mergers and Acquisitions 

‍You might want to merge with another company. You need to know the exchange ratio. How much is your company worth compared to theirs? A valuation answers this. It ensures the deal is fair to all shareholders.

‍Obtaining Financing 

‍Banks need collateral. They need to know the value of your assets. They also look at your ability to generate cash. A strong valuation report helps you secure loans. It shows the bank you are a serious borrower. It lowers their risk perception.

‍Tax Reporting 

‍Tax laws in Nepal are specific. Transfers of shares trigger tax events. The tax office examines these transactions. If you transfer shares at a price lower than fair market value, you face penalties. A professional valuation protects you. It documents the fair market value. It serves as evidence if the tax authorities question your transaction.

‍Shareholder Disputes 

‍Partners argue. Sometimes a partner wants to leave. You need to buy them out. You need a fair price. A valuation provides an objective number. It prevents long legal battles. It saves relationships.

‍Divorce Proceedings

‍Business interests are marital assets. If you get divorced, you must split the value. The court needs to know what the business is worth. A neutral valuator provides this number.

Valuators use three primary methods. They do not use one method in isolation. They look at all three. They correlate the results. This gives the most accurate figure.

‍The Asset Approach 

‍This method looks at your balance sheet. Firms list all your assets. They subtract all your liabilities. The difference is the value. This sounds simple. It is not. The book value on your balance sheet is rarely the fair market value.

They adjust the values. Land bought ten years ago is worth more now. Machinery depreciated to zero might still work. They revalue these assets to current market rates. This method works well for holding companies. It suits businesses with heavy investments in real estate or equipment. It is less effective for service companies. It ignores the value of your brand and your customer list.

‍The Income Approach 

‍This method focuses on the future. A buyer buys your company to make money. They care about future profits. They project your future cash flow. They determine the risk of achieving those flows.

They use a method called Discounted Cash Flow or DCF. they forecast your revenue and expenses for the next five years. They calculate the free cash flow. They discount this cash flow back to the present value. The discount rate reflects the risk. A risky business has a higher discount rate. A stable business has a lower rate.

This approach is common for established businesses. It captures the value of your intangibles. It rewards growth. It relies heavily on accurate projections. You must have reliable financial data.

‍The Market Approach 

‍This method compares you to others. They look for similar companies sold recently. They look at their sale price relative to their revenue or profit. They apply these multiples to your numbers. This is difficult in our local context. 

Company valuation in Kathmandu faces a data problem. Private transaction data is hard to find. Firms often do not have a large database of sold companies like in the US. They use available data from the stock exchange for public companies. They adjust for the difference in size and liquidity. They use our internal database of past transactions. They use our experience in the local market to find relevant benchmarks.

Financial Performance 

‍Revenue growth increases value. High profit margins increase value. Consistent earnings history lowers risk. Buyers pay more for predictable cash flow. Chaotic earnings reduce value.

‍Growth Potential 

‍Buyers pay for the future. If you have a clear path to growth, you get a higher price. This includes new products, new markets, or scalability. You must demonstrate this potential with data.

‍Customer Concentration
 
‍This is a major risk. If one client provides half your revenue, you have a problem. If that client leaves, the business collapses. Buyers discount this risk. A diversified client base increases value.

‍Management Depth 

‍A business dependent on the owner is worth less. If the business stops when you go on holiday, you have a job, not a business. Buyers want a business that runs without you. A strong management team adds value. It ensures continuity.

‍Market Position 

‍A dominant market share commands a premium. Brand recognition adds value.Barriers to entry protect your profits. If anyone competes with you easily, your value drops.

Accountant firms follow a structured process. They adhere to international valuation standards. They adapt them to the context of business valuation in Nepal.

‍Engagement and Planning 

‍Firms define the scope. They agree on the purpose of the valuation. They identify the standard of value. Usually, this is Fair Market Value. They list the required documents.

‍Information Gathering 

‍You provide the data. Firms need financial statements for the past five years. They need tax returns, legal documents, asset lists and your business plan.

‍Management Interview 

‍Firms need to understand the story behind the numbers. They ask about your strategy and ask about your competitors. They ask about your risks. They will visit your office. They will see your operations. This qualitative data is vital.

‍Financial Analysis 

‍Accountant firms normalize your financial statements. Private companies often minimize profit to reduce tax. They pay personal expenses through the business. They add these back. They adjust for non-recurring items. They calculate the true earning power of the business.

‍Valuation Modeling 

‍Firms build the models. They apply the selected methods. They crunch the numbers. They test different scenarios. They cross-check the results.

‍Discounts and Premiums 

‍The firms apply adjustments. If you sell a minority share, it is worth less. The buyer lacks control. they apply a discount for lack of control. Private company shares are hard to sell. They apply a discount for lack of marketability. If the company has strategic value to a specific buyer, we might add a strategic premium.

‍Reporting 

‍Finally, the firms write the report. It explains their methodology. It shows the calculations. It provides the final conclusion of value. This is a defensible document. You use it for your transaction or legal requirement.

Do not do this yourself. You are biased. You love your business. You ignore the flaws. You overestimate the potential. A third party sees the reality.

Do not use rules of thumb. People say businesses sell for two times revenue. This is a generalization. It ignores your specific profit margins. It ignores your debt. It ignores your growth. Every business is unique.

Do not wait until the last minute. Valuation takes time. If you need to sell quickly, you lose leverage. Prepare in advance. Get a valuation a year before you plan to sell. This identifies weaknesses. You have time to fix them. You increase the value before the sale.

You cannot apply global standards blindly. Nepal has unique challenges. Land prices in Kathmandu distort asset values. Company valuation in Kathmandu requires understanding these local dynamics. Labor laws differ. Tax compliance varies.

Financial advisory in Nepal requires local knowledge. They know the banking sector. They know the regulatory environment. They know the real estate market. They combine global valuation theory with local reality. This gives you a number you trust.

Your balance sheet misses things. It misses your reputation. It misses your proprietary technology. It misses your trained workforce. These are intangible assets. In the modern economy, these drive value.

A tech company has few physical assets. Its value lies in code and users. A consulting firm has value in its relationships. They identify these intangibles. They value them. They ensure you get paid for everything you built.