The factors that lead to a valuation of a company’s worth compared to that of the financial statements and how company executives create the most value for all stakeholders.
Several companies find ways to thrive despite the state of the economy making them have high acquisition prospects and can have extraordinary valuations. Some of the factors that affect the valuations of the companies include the strength of the existing client relationships, the extent to which the organization has invested in technology, the financials, the marketing strategy, image of the company, the employees, financials as well as the quality of the management team. The experts value the relationships between the clients and the organizations in high regard hence a company that has a good relationship with the clients is likely to rank highly. The ability of the company to attract and retain the clients is an attribute of future success. Technology creates efficiencies in service delivery hence it is important in running the organization making it have a higher value. The company that is specialized in a growing and well-funded market is likely to have a higher value. The financials that indicate higher prospects also increase the value of an organization. Employees are also important in the valuation of the company in such a way that a company that has a lower employee turnover level is likely to have a higher value. The image and reputation of a company play an important role in increasing the value of the company. Organizations with a high profile are likely to highly value compared to the rest. The quality of the management team is important in the valuation of the company that is, a company that is well managed is likely to be highly valued since the decisions that they take will be geared towards the improvement of the organization’s value in the organization. The company can increase value for its stakeholders by making strategic decisions that are important to the organization, making acquisitions that will increase the value, carry only the assets that maximize the value and reward the stakeholders for a job well done.
Koller, T., Goedhart, M., & Wessels, D. (2010). Valuation: measuring and managing the value of companies (Vol. 499). John Wiley and sons.