Business Valuation. A basic approach

Business valuation is invariably linked with the focus on value maximisation. The goal of every company is to increase its equity, which requires the development and implementation of a long-term value creation strategy. The economic value of an enterprise is of primary importance here, such value being understood as the enterprise’s capacity for free cash flows generation. The emphasis is on the future, and not on the past; on real income and not on book profit. The aim of this book is to present the theories, models and methods of business valuation while contrasting them with the practice of company value assessment. We begin our discussion with a detailed description of various approaches to, and types of, value categories – from historical and philosophical ones to those grounded in economic theory. The history and the present practice of valuation leads us to the conclusion that valuation is both a theory (as one of the initial and most important components of Value Based Management) and an art, based on the experience and intuition of business appraiser. However, we should be fully aware of the fact that even the application of the best theories and methods of business valuation does not automatically reflect the real market value of the assets at hand (especially in the short-term). Marek Panfil, Andrzej Szablewski OPINIONS This book includes a collection of papers which, whether studied together or separately, are remarkable examples of a combination of the authors’ first-rate proficiency and insight and their ability to arouse the readers’ interest. The opus discussed here is both a scientific work and a popular one, understood as addressed not exclusively to scholars, but also to all those dealing with business valuation in practice. It presents a wide range of issues which, when they are known and understood, prevent us from getting lost in the increasingly complex realities of the global economy. In this book, stock market investors will find inspiration, for their own reflection, on the basis of the development of company value and, undoubtedly, a wealth of knowledge which will allow them to make critical evaluations of their investment decisions. Ludwik Sobolewski PhD, CEO of the Warsaw Stock Exchange Divided into 12 chapters, this book is a treasure trove of information which will provide a stimulus for every manager to search for value in his or her enterprise. Practical examples appended to theoretical analysis enhance the issues discussed that, quite straightforwardly explained, can be referred to as a compendium of knowledge necessary for students, university fellows and all practitioners as well. I will gladly use this publication to increase my knowledge pertaining either to the evaluation of investors’ expectations or to the assessment of the influence which customer value exerts on company value. Herbert Wirth, PhD, CEO of KGHM Polska Miedź SA (copper and silver global manufacturer) A practical guide to business valuation. The book, set mostly in the contemporary reality of the Polish economy, offers a combination of theoretical knowledge and provides a good deal of examples or case studies. This volume should also be required reading for financiers and capital market participants. Michał Wrzesiński, PhD, Professor of Warsaw School of Economic, CEO of Dom Maklerski Navigator SA (a brokerage house) A long awaited book in Poland. I can recommend it as a handbook for evaluating various assets – from companies to non-material and legal values. Among the many good points of this volume I would underline the diversity of the questions raised as well as the presentation of different kinds of approach and valuation methods applied in concrete situations. The chapter devoted to football club valuation is really interesting. Equally noteworthy are the papers in which the authors elaborate on the evaluation of enterprises operating in a commodity-type industry – KGHM (copper) and Exxon Mobil (oil). Jacek Socha, vice-president and partner of PwC in Poland