Bewertung von unternehmen: Meaning, Criticisms & Real-World Uses

What Is Bewertung von Unternehmen?

Bewertung von Unternehmen, also known as company valuation, is the process of determining the economic worth of a business entity or its assets. This fundamental discipline within Corporate Finance provides a quantitative estimate of a company's value, which can differ from its market price. The objective is to arrive at an intrinsic value that reflects the business's true worth based on its financial characteristics, future prospects, and risk profile. Company valuation often relies on analyzing a company's Financial Statements, including the Balance Sheet, Income Statement, and Cash Flow Statement.

History and Origin

The concept of company valuation has roots tracing back centuries, with rudimentary forms emerging alongside early commerce and finance. However, modern valuation methodologies, particularly those based on the idea of discounting future cash flows, gained prominence more recently. The application of Discounted Cash Flow (DCF) analysis, a cornerstone of present-day valuation, was discussed as early as the 1800s and was notably explicated by John Burr Williams in his 1938 work, The Theory of Investment Value. This method became more widely discussed in financial economics during the 1960s and saw increased adoption in U.S. courts in the 1980s and 1990s.⁴ The evolution of valuation theory, in a modern sense, is often linked to academic contributions such as Irving Fisher's financial budget theory and the Modigliani-Miller theorem.³

Key Takeaways

Bewertung von Unternehmen determines a business's economic worth, providing an intrinsic value often different from its market price.
The primary approaches to valuation include the income approach (like DCF), the market approach (using Valuation Multiples), and the Asset Valuation approach.
It is a critical component in various financial decisions, including Mergers and Acquisitions, Initial Public Offerings, and investment analysis.
Valuation relies heavily on assumptions about future performance, discount rates, and market conditions, making it inherently subjective and sensitive to changes in these inputs.
No single valuation method is universally superior; often, a combination of approaches is used to provide a comprehensive view.

Formula and Calculation

One of the most widely used methods in company valuation is the Discounted Cash Flow (DCF) model. This intrinsic valuation method estimates the value of an asset based on its expected future cash flows, which are discounted to their present value using a discount rate.

The basic formula for valuing a company using the free cash flow to firm (FCFF) variant of the DCF model is:

\text{Unternehmenswert} = \sum_{t=1}^{n} \frac{\text{FCFF}_t}{(1 + \text{WACC})^t} + \frac{\text{TV}}{(1 + \text{WACC})^n}

Where:

(\text{FCFF}_t) = Free Cash Flow to Firm in period (t)
(\text{WACC}) = Weighted Average Cost of Capital
(n) = Number of periods in the explicit forecast horizon
(\text{TV}) = Terminal Value at the end of the explicit forecast horizon

The Terminal Value ((\text{TV})) often represents the value of cash flows beyond the explicit forecast period and can be calculated using a perpetuity growth model:

\text{TV} = \frac{\text{FCFF}_{n+1}}{\text{WACC} - g}

Where:

(\text{FCFF}_{n+1}) = Free Cash Flow to Firm in the first year after the explicit forecast period
(g) = Perpetual growth rate of free cash flows

The Weighted Average Cost of Capital (WACC) serves as the discount rate and reflects the overall required Return on Investment for the company, considering its Capital Structure composed of debt and equity.

Interpreting the Bewertung von Unternehmen

Interpreting the results of a Bewertung von Unternehmen involves comparing the calculated intrinsic value to the company's current Market Capitalization or Enterprise Value. If the estimated intrinsic value is higher than the market value, the company might be considered undervalued, suggesting a potential buying opportunity. Conversely, if the intrinsic value is lower than the market value, the company could be overvalued.

Beyond a simple "buy" or "sell" signal, valuation provides insights into the drivers of a company's worth. For example, a high valuation might indicate strong expected growth, efficient operations, or a competitive advantage. A low valuation could point to perceived risks, weak fundamentals, or market inefficiency. Analysts also use valuation to understand how various strategic decisions—such as investments in new projects, changes in capital structure, or operational improvements—could impact a company's long-term value.

Hypothetical Example

Consider a hypothetical technology startup, "InnovateTech Inc.," which is not yet publicly traded. An Investment Banking firm is hired to perform a Bewertung von Unternehmen to prepare for a potential Series B funding round.

The firm projects InnovateTech's Free Cash Flow to Firm (FCFF) for the next five years:

Year 1: €5 million
Year 2: €8 million
Year 3: €12 million
Year 4: €15 million
Year 5: €18 million

They estimate InnovateTech's Weighted Average Cost of Capital (WACC) to be 12% and a perpetual growth rate (g) of 4% after Year 5.

First, calculate the present value of each year's FCFF:

PV (Year 1) = ( \frac{5}{(1+0.12)^1} = 4.46 \text{ million euro} )
PV (Year 2) = ( \frac{8}{(1+0.12)^2} = 6.37 \text{ million euro} )
PV (Year 3) = ( \frac{12}{(1+0.12)^3} = 8.54 \text{ million euro} )
PV (Year 4) = ( \frac{15}{(1+0.12)^4} = 9.56 \text{ million euro} )
PV (Year 5) = ( \frac{18}{(1+0.12)^5} = 10.21 \text{ million euro} )

Sum of Present Values of explicit FCFF = ( 4.46 + 6.37 + 8.54 + 9.56 + 10.21 = 39.14 \text{ million euro} ).

Next, calculate the Terminal Value (TV) at the end of Year 5:

FCFF for Year 6 = ( 18 \times (1 + 0.04) = 18.72 \text{ million euro} )
TV = ( \frac{18.72}{0.12 - 0.04} = \frac{18.72}{0.08} = 234 \text{ million euro} )

Now, discount the Terminal Value back to the present:

PV (TV) = ( \frac{234}{(1+0.12)^5} = \frac{234}{1.7623} = 132.78 \text{ million euro} )

Finally, the estimated Bewertung von Unternehmen for InnovateTech Inc. is the sum of the present values of explicit cash flows and the present value of the terminal value:

Total Valuation = ( 39.14 + 132.78 = 171.92 \text{ million euro} )

This indicates that, based on these projections and assumptions, InnovateTech Inc. has an estimated intrinsic value of approximately €171.92 million.

Practical Applications

Bewertung von Unternehmen is a crucial process with diverse practical applications across the financial world:

Mergers and Acquisitions (M&A): Valuation is central to determining a fair purchase price for a target company in M&A deals. Both the acquiring and target companies conduct valuations to ensure they are making financially sound decisions.
Initial Public Offerings (IPOs): Before a company goes public, underwriters and the company itself perform extensive valuations to set the offering price for its shares. This helps ensure successful fundraising and a reasonable market debut.
Investment Decisions: Investors, from individuals to large institutional funds, use valuation techniques to identify undervalued or overvalued securities. This helps them decide whether to buy, hold, or sell an investment, aiming to achieve a favorable Return on Investment.
Corporate Strategy and Planning: Businesses use internal valuations to assess the value generated by different segments, projects, or strategic initiatives. This informs capital allocation decisions, divestitures, and overall corporate planning.
Financial Reporting and Compliance: For public companies, valuation can be required for various financial reporting purposes, such as impairment testing of assets, goodwill valuation, and purchase price allocation in business combinations. The U.S. Securities and Exchange Commission (SEC) mandates specific disclosures for certain transactions like mergers, requiring companies to file forms like Form S-4, which include material financial information about the involved entities.
Litigatio²n and Taxation: Valuation is often necessary in legal disputes (e.g., shareholder disagreements, divorce settlements) and for tax purposes (e.g., estate and gift taxes, property tax assessments).

Limitations and Criticisms

While Bewertung von Unternehmen is an essential tool, it comes with inherent limitations and criticisms:

Subjectivity and Assumptions: Valuation models, particularly DCF, are highly sensitive to the assumptions made about future cash flows, growth rates, and discount rates. Small changes in these inputs can lead to significantly different valuation outcomes. This reliance on subjective judgments means that valuation is not an exact science.
Forecasti¹ng Difficulty: Accurately forecasting a company's future performance, especially for longer periods or in volatile industries, is challenging. Unexpected economic downturns, competitive shifts, or technological disruptions can render projections inaccurate, thereby impacting the reliability of the valuation.
Terminal Value Uncertainty: The terminal value often accounts for a large portion of a company's total estimated value in DCF models. Its calculation, based on perpetual growth or exit multiples, introduces substantial uncertainty and can be a major source of error.
Market Inefficiencies and Behavioral Biases: While valuation aims to find an intrinsic value, actual market prices can deviate due to market inefficiencies or behavioral biases among investors. Overconfidence, anchoring, and herd behavior can lead to overvaluation or undervaluation in the market, making it difficult for the calculated intrinsic value to align with prevailing prices.
Lack of Comparables: For unique businesses or those in niche industries, finding truly comparable companies for market-based valuation approaches can be difficult, limiting the reliability of such methods.
Intangible Assets: Valuing companies with significant intangible assets (e.g., brand recognition, intellectual property, customer relationships) can be challenging as these are often not fully captured on a traditional Balance Sheet and may be difficult to quantify monetarily.

Bewertung von Unternehmen vs. Due Diligence

Bewertung von Unternehmen and Due Diligence are distinct but complementary processes in the world of finance, often performed in tandem, especially during transactions like mergers or acquisitions.

Bewertung von Unternehmen focuses on assigning a monetary value to a business or its assets. It is a quantitative process that uses financial models and assumptions to estimate intrinsic worth, answerable with a numerical value (e.g., "The company is worth €100 million"). Its primary goal is to determine a fair price for a transaction or to assess investment attractiveness.

Due diligence, on the other hand, is a comprehensive investigative process undertaken by a prospective buyer or investor to thoroughly assess a target company's business, legal, financial, and operational affairs. It aims to verify the accuracy of information provided by the seller, uncover potential risks or liabilities, and gain a deeper understanding of the business's operations and prospects. Due diligence is less about assigning a specific number and more about risk identification, information verification, and comprehensive understanding. While valuation asks "What is it worth?", due diligence asks "What are we really buying, and what are the risks?". The findings from due diligence often inform and refine the assumptions used in the company valuation process.

FAQs

Q1: Why is company valuation important?
A1: Company valuation is crucial for informed decision-making in finance. It helps investors determine if a stock is overvalued or undervalued, assists companies in setting prices for Initial Public Offerings or Mergers and Acquisitions, guides strategic planning, and is required for various financial reporting and tax purposes.

Q2: What are the main methods of company valuation?
A2: The three primary approaches are the income approach (e.g., Discounted Cash Flow), the market approach (e.g., using Valuation Multiples like price-to-earnings ratios from comparable companies), and the Asset Valuation approach, which values a company based on its net assets.

Q3: Is company valuation an exact science?
A3: No, company valuation is not an exact science. It relies heavily on assumptions and projections about future performance, which are inherently uncertain. Different analysts using different assumptions or models can arrive at varying valuations for the same company, highlighting its subjective nature.

Q4: What is a "discount rate" in valuation?
A4: The discount rate is the rate of return used to convert future cash flows into their present value. It reflects the time value of money and the risk associated with receiving those future cash flows. A higher discount rate implies greater risk or a higher required return, leading to a lower present value. For a company, the Cost of Capital, such as the Weighted Average Cost of Capital (WACC), is commonly used.