The most common mistakes when evaluating your company

Os erros mais comuns na avaliação da sua empresa
Blog / Financial Literacy

The most common mistakes when evaluating your company

To successfully sell your company, to obtain a bank loan, to determine the fair value of your assets in order to plan your inheritance, among many other purposes, it is extremely important to obtain a evaluation of your company.

It is therefore important to know the most common mistakes that occur during a company valuation.

Here are some common mistakes:

1. Appraiser does not understand the business:If the consultant does not understand the business he is valuing, he will not be able to project the financial statements correctly. Understanding the business being evaluated allows you to ascertain the CAPEX and working capital needs and how these relate to the Income Statement, the behavior of margins in relation to the company’s organic growth, relating the operation to permanent and circulating capital. A deep understanding does not mean a number of exhaustive assumptions, it means a working understanding of the assumptions used.

2. Not taking into account financial obligations: Calculating the market value of the company’s assets is just an intermediate step, to determine the market value of equity it is necessary to consider existing debts, as well as specific non-liability items. current.

3. Ignoring current market conditions:A company’s valuation reflects past and future performance, so it needs to be adjusted considering factors such as sectoral trends, local competition, evolution of the target segment and macroeconomic and political context. p>

4. Not using the correct valuation model: Various valuation models, such as discounted cash flow analysis or asset-based valuation, should be used depending on the industry and type of business being valued. Choosing a suitable model provides correct results and accurate valuation.

5. Insufficient data collection and analysis: A comprehensive assessment should analyze the company’s financial records. This means collecting up-to-date information about the company’s performance, such as its profitability, revenue, expenses, debt ratios and customer base.

6. Valuations performed by an unqualified professional:Accurate business valuations require the expertise of a qualified professional. Attempting to value the business yourself, or requesting the services of technicians from similar areas to do so, may lead to errors in determining the value of the company.

7. Errors in Presenting the Assessment Report: Even if the assessment is carried out correctly, errors may occur during the presentation of the report. This includes not adequately explaining and justifying assumptions, not providing sufficient data for key components of the analysis, or even including outdated information.

The importance of an accurate method and result must be considered when it comes to business valuations. By considering the above-mentioned factors, business owners can ensure that their assessments are as accurate and reliable as possible.


Understanding all the factors that influence a valuation – from financial obligations to current market conditions – leads to accurate valuation of your company. With the help of a qualified professional, companies can successfully determine their value and make investment or sales decisions.

Business valuations are an expensive and often time-consuming process. That’s why at ValuingTools we provide a fast and competitive service. Contact us!

Carry out a free simulation of your business now to find out how much your company is worth: