The Importance of Valuation in Business Deals


The Importance of Valuation in Business Deals

Valuation can impact a business deal in several ways. For example, if the valuation of a company is too high, it may deter potential buyers or partners from pursuing a deal. On the other hand, if the valuation is too low, it may result in the seller receiving less than they are entitled to. Therefore, it’s crucial to use accurate and reliable valuation methods when conducting business deals.

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In Kenya, we can see the importance of valuation in the recent acquisition of Kenyan software firm, DPO Group, by Network International. DPO Group was valued at $288 million, and the deal was the largest-ever acquisition of an African fintech firm. The accurate valuation of DPO Group was critical to the success of the deal, as it enabled Network International to offer a fair price and secure the acquisition.

Globally, we can see the impact of inaccurate valuations in the case of WeWork. In 2019, WeWork attempted to go public with a valuation of $47 billion. However, after a closer look at the company’s financials, its valuation was slashed to $8 billion. The inaccurate valuation resulted in WeWork losing potential investors and damaging its reputation.

In conclusion, valuation is a crucial aspect of any business deal, and accurate valuations are essential for the success of these deals. This applies to businesses in Kenya and globally, and it’s important to use reliable valuation methods and seek professional advice to ensure a fair and successful deal.

We offer, Deal Structuring and Valuation Services

What should you expect from this service:

We will assist you in shaping business deals to your advantage, whether you are buying or exiting a business.

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