As the owner of DeWitt PLLC in Miami, Suzanne DeWitt focuses on domestic and international taxation, as well as private banking. Beyond that, she serves as the principal of Valora, a Miami-based consulting firm. In the latter capacity, Suzanne DeWitt and her colleagues provide fiduciary, corporate finance, tax, wealth structuring, and valuation services to their clients.
Although there are several methodologies that can be used to determine a company’s valuation, multiple factors, including the following, are common across most of these methods:
- Growth prospects: There are two parts to this factor that are usually examined during the valuation process: growth prospects based on industry and growth prospects based on the company’s unique potential. When businesses operate in a fast-growing industry or have unique features that prime them for rapid growth, their valuation is often higher.
- Earnings record: To get an idea of a company’s future earnings, professionals will look into that business’ earnings records. As they do this, they will often place a higher value on companies with a stable, above-average earnings record. Valuation also increases when companies show an upward trend in gross income over several years instead of a downward one.
- Client relationships: A key indicator of a business’ future success is its ability to attract and retain clients. Due to this, the number of long-term client relationships and client loyalty will affect the valuation of a company. The same is true of businesses that rely heavily on a few clients. When a company receives most of its income from a few clients, it’s deemed as riskier and, thus, is valued lower.
