Let’s see how best to do business valuation and how it’s related to you, whether you plan to start your own business or perhaps register a company in Poland.
Businesses are more complex than a simple math problem. Business valuation is the process of figuring out what your (or someone else’s) company is actually worth. And that doesn’t just mean how much it makes.
When you want to expand your business to Poland or are perhaps looking for an investor or planning to sell, it’s crucial to know the real value of the company. But without the preparation of your own, you’re simply not in the position of having that knowledge. And that’s when the real professionals come in.
Experts typically use three main approaches — each with its strengths and quirks.
It involves a lot of guessing, and there’s a basic principle. It’s based on the cash a business can be expected to generate in the future. The analysts pull in those cash flow numbers and use a discount rate to make the future profits equal to today’s worth (inflation). Sounds simple?
Best for: Businesses with steady revenue and growth projections.
When you want to rent or sell your house, you go on to check how much your neighbours sold theirs for. That’s the Market approach, and it works in a similar way. The companies in your industry that have been selling recently are used to make an estimate of what the price would be for a similar company. It’s fast. And you can expect the price to be fair.
Best for: Competitive sectors with plenty of data.
This is where the “What is the company’s worth?” question starts. The company’s physical and non-physical property — less all of its obligations. This is certainly the most straightforward but not the easiest of all.
Best for: Asset-heavy businesses or when the company is being liquidated.
Business valuation experts will look at financial statements. They will evaluate balance sheets, income statements, and cash flow statements and also look at regulatory changes and competition. Basically, they’ll dig into every relevant item related to the business.
They might consider the following questions:
Then, they’ll apply one (or more) of the valuation methods above, cross-check results, and adjust for anything that stands out. The end goal? A credible, defendable valuation.
If you intend to register a company in Poland, you might say valuations are of no essence at this point. The truth is that they are a great tool for anyone taking a long-term view of their business.
Want those investors to call you in the future? You need to have evidence of healthy financials and growth projections to support a good company valuation. Want to have future partners or buyers knocking on the door? They should be able to see value in what you’ve been building.
So, even when it comes to company incorporation in Poland — deciding on your company structure, planning your finances, or doing your revenue forecasting, for instance — you are already shaping your future valuation.
You should definitely follow the proper legal and financial steps, and it certainly helps to have experienced local professionals who know the ins and outs of Polish law, are also familiar with international business expectations, and will be there for you as your trusted partner.
Whether it’s structuring your articles of association or discussing applicable tax rates or tax relief in your country, all the decisions that you’ll make at the beginning will impact your company’s future valuation.
And what value you put on your current business back home might impact how you proceed when expanding your business. So, before you decide to set up a company in Poland, take a minute to think long-term: In what time frame are you looking to sell your business? What is your growth target for your business until then? And how will you prove to the market that your business is really worth what you are looking to sell it for later on?
Valuations are not just the numbers — they are the story of your business so far and in the future. Whether you’re looking to enter the Polish market, raise capital, or even for an M&A process, your valuation is your power.
And if you are just starting out? Well, it’s really the right time to start laying the foundation today. Start strong, stay in the know, and know your worth.
