What is the difference between Enterprise Value (EV) and Equity Value?

Enterprise Value (EV) represents the total value of a company's core operating business, belonging to all investors (both debt and equity holders). Equity Value is the value that remains strictly for the shareholders after deducting the company's total debt from the Enterprise Value and adding any cash and cash equivalents.

What documents are required to start a full business valuation?

To begin the valuation, the appraiser will need the company's audited financial statements (balance sheet, income statement) for the last 3-5 years, a business plan with financial projections for the upcoming years, a fixed asset register, details of the loan portfolio, and copies of major contracts with clients or suppliers.

How long does the enterprise valuation process take?

A full enterprise valuation is a highly analytical process. For a small to medium-sized enterprise (SME), it typically takes between 2 to 4 weeks. For large corporations, holdings, or businesses with complex operational structures, the process can take from 1 to 2 months to complete thoroughly.

Does this service include the valuation of the company's brand?

Yes. As part of a full business valuation, if the company's revenue is heavily reliant on its brand recognition, the appraiser will conduct a specific valuation of intangible assets (such as goodwill, trademarks, and patents) in accordance with IVS standards.

Enterprise Value Appraisal in Georgia | Legal.ge

What is a Full Enterprise Economic Value Appraisal?

A full enterprise economic value appraisal (Business Valuation) is a complex, in-depth financial and analytical process aimed at determining the true, objective, and fair market value of an operating business. It is not merely the sum of the assets listed on a company's balance sheet; rather, it is the valuation of the business as a living organism capable of generating future income. In Georgia, where the capital market is developing and the volume of both foreign and local investments in Mergers and Acquisitions (M&A) is growing, accurate business valuation is critically important. The process takes into account the company's tangible assets (real estate, machinery), intangible assets (brand, patents, client base), historical financial performance, projected future cash flows, industry-specific risks, and the macroeconomic environment. A highly qualified appraiser analyzes the company not just as a static entity, but evaluates its potential within a competitive market, which is ultimately reflected in the certified valuation report issued by the expert.

What Does the Enterprise Appraisal Service Cover?

A full business valuation covers all aspects of an organization's economic activity and includes the following key components:

Financial Analysis and Modeling: A detailed audit and normalization of the company's historical financial statements (balance sheet, income statement, cash flows) over the last 3-5 years, and the construction of a Discounted Cash Flow (DCF) model forecasting the next 5-10 years.
Valuation of Tangible and Intangible Assets: Determining the market value of the company's real estate, specialized equipment, inventory, and stock. It also includes the valuation of brand equity, licenses, proprietary software, and goodwill.
Analysis of Liabilities and Capital Structure: Reviewing the company's credit portfolio, current and long-term liabilities, and accounts payable to determine the exact volume of Equity Value and the total Enterprise Value.
Assessment of Industry and Macroeconomic Risks: Calculating sectoral trends, market competitiveness, legislative regulations, and currency or political risks, all of which are factored into the Weighted Average Cost of Capital (WACC) discount rate.
Identification of Synergies: In the context of M&A transactions, evaluating the additional value that can be created through the merger of two companies or the optimization of operational expenses.

When is a Full Business Valuation Necessary?

A comprehensive enterprise valuation is essential for making numerous strategic, legal, and financial decisions. The most common real-world scenarios include:

Mergers and Acquisitions (M&A) and Business Sales: When an owner is selling the business or a stake in it, or when an investor is acquiring a company. An independent valuation protects the buyer from overpayment and the seller from undervaluing their asset.
Shareholder Disputes and Buyouts: When a founding partner leaves the business and requests compensation for their shares, calculating the objective value of the entire enterprise is necessary to determine fair remuneration.
Raising Capital and IPOs: When attracting capital from venture funds or Private Equity, or prior to an Initial Public Offering (IPO), investors require a thoroughly justified business valuation.
Financial Reporting and Auditing (IFRS 3, IAS 36): Under international standards, companies must periodically conduct impairment tests for goodwill and other assets arising from business combinations, which requires a full enterprise valuation.
Litigation and Bankruptcy: During the liquidation, bankruptcy, or reorganization of a company, valuation is needed to satisfy creditors' claims or to quantify economic damages.
Tax Purposes: When gifting shares, transferring them through inheritance, or executing transactions between related parties, a valuation is required to comply with Georgian tax legislation.

Georgian Legal and Regulatory Framework

Business valuation in Georgia is regulated by top-tier international and local standards. The primary guiding document is the International Valuation Standards (IVS), specifically IVS 200 (Businesses and Business Interests), which defines the methodology and ethical norms. Regarding corporate governance and share disposal, the process is governed by the Law on Entrepreneurs, which protects the rights of minority shareholders by ensuring fair value during mandatory share buyouts (squeeze-outs). For accounting and auditing purposes, the valuation relies on the Law on Accounting, Reporting and Auditing and International Financial Reporting Standards (IFRS). Furthermore, when shares are alienated, the Tax Code of Georgia is strictly applied to correctly determine the tax base (capital gains). The appraiser must rigorously adhere to this legal framework to ensure the issued report is legally robust and recognized by all authorities.

Valuation Approaches and Methodology

A full economic valuation of an enterprise utilizes three main internationally recognized approaches, the synthesis of which yields the most accurate result:

Income Approach: Based on the Discounted Cash Flow (DCF) method. This is the most common approach for operating businesses. It calculates the future free cash flows generated by the company and converts them into present value using an appropriate risk (discount) rate.
Market Approach: The company is compared to public companies with a similar profile operating in the market (Guideline Public Company Method) or to recently completed M&A transactions. Multiples such as EV/EBITDA, P/E, and P/S are applied.
Asset-based (Cost) Approach: Calculates the Net Asset Value (NAV) of the company. All company assets are valued at market price, and all liabilities are subtracted. This method is mainly used for holding companies, real estate-heavy firms, or enterprises facing liquidation.

Why is Legal.ge the Best Platform to Find an Appraiser?

A full business valuation is an exceedingly complex process that requires highly qualified financial analysts and auditors. A mistake in valuation can lead to millions in financial losses or the loss of a major investor. Legal.ge is a platform that brings together Georgia's top certified business appraisers and financial advisors, who possess vast experience in M&A transactions and corporate finance. The platform allows you to review specialists' portfolios, their experience across various industries, and choose a professional perfectly suited to the specifics of your company. Find your specialist on Legal.ge to receive a reliable, internationally recognized business valuation report of the highest standard, which will empower you to make the right strategic decisions.