Why You Need An Unbiased Asset Valuation

Posted by on Jul 26, 2018 in Financial Modeling | No Comments

If you’re looking to sell your asset or project, or if you’re looking to raise additional capital, having an unbiased and expert asset valuation is critical. Errors in calculations or a misinterpretation of the data can lead to a devaluation of your asset, or money left on the table during negotiations. Transparency during the asset valuation process is a key negotiation piece for both your team and your investors or buyers.

Obtaining an unbiased, expert asset valuation builds confidence about your asset. Investors and buyers will review your data and their own research, but having an unbiased valuation provides a strong and solid base from which to begin negotiations.

There are three methods in which financial analysts can conduct an asset valuation. However when you need an asset valuation to help obtain additional capital or sell a project, having an unbiased third-party conduct these valuations is essential.

Discounted Cash Flow (DCF)

A DCF model, otherwise known as an absolute value model, values assets based only on the asset’s characteristics and on future cash flows, utilizing the time value of money. With Darby Finance’s customized and dynamic Excel-based DCF models, you’ll get modeling best practices, peer reviews, and application of rigorous modeling-excellence standards.

Net Asset Value (NAV) Analysis

NAV analysis is a great alternative to a traditional DCF analysis if your business or investment opportunity cannot assume perpetual growth. Common examples include energy and mining companies as they cannot assume perpetual growth. This method allows investors to assume a production decline rate and calculate revenue until reserves run out.

Comparable Transaction Analysis

Otherwise known as the “precedent transaction analysis” or “deal comps,” a comparable transaction analysis is used to apply “known knowns” from other recent transactions that are similar in structure to your company. The value of this analysis is in using real-market examples to help identify known costs and risks. Darby Finance uses a comparable transaction analysis to compare the value of similar assets to the target asset. The value of this analysis is in using real-market examples to help identify known costs and risks associated with similar assets.

If you’d like to see how Darby Finance can develop an unbiased asset valuation for your company, contact us today.


About Darby Finance – A Leading Financial Consulting Firm

Darby Finance helps clients make better financial decisions by transforming complex data into a compelling and easy-to-understand financial story. We work alongside our clients to develop customized financial models, valuations, and sophisticated investor presentations while utilizing more than 40 years of experience in energy, finance and investor relations.

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