One of the options to get the golden visa in Portigal is the investment of 350.000 EUR in an existing company in Portugal and create 5 new jobs. Many companies offer a fixed return rate which makes this kind of investments very attractive. Of course the company has to be well chosen. But how do you find a good investment in Portugal? We from Pearls of Portugal help our clients to find the right "Pearls" in the market.
In principle, there are three different ways of determining the value of a company:
A good evaluation contains at least one evaluation according to each of these three basic types, i.e. at least three evaluations. We now run through the three valuation approaches based on our examples. However, we do not go into all the details because we only want to give an overview here.
The evaluation of a company based on its substance is the oldest evaluation idea and assumes that the company is worth just as much as the sum of the parts that make it up. Most of the time, one thinks of the physical, tangible parts such as land, buildings, machines, etc. Strictly speaking, however, all intangible assets such as brands, the customer base or the know-how of the employees are also included - but unfortunately this is all too common in the valuation to be forgotten.
Evaluating a company based on future profits (or rather surpluses) is the way we think is the right thing today. Because that's exactly what the buyer is looking for - he actually doesn't want machines and fleet, he'll buy your future profits. The whole substance is, so to speak, only a “necessary evil”; You probably didn't start your company to own machines, but to make money with them. “It is not ownership that creates wealth, but use.”
This also makes it clear that it is not about the profits of the past but about the profits of the future. Because the buyer can only benefit from future profits . So, if you do it right, we actually need planning the profit and loss account and the balance sheet, which e.g. anticipates the next 3-5 years.
Now we come to the third and last procedure. The valuation with multiples shows at what price similar companies are currently being bought or sold on the market. The company valuation with multiples is therefore very close to the price and is used to better assess the valuation results of the other two methods.
Of course, the challenge here is to find the right multiplier. Whether your company is worth 5 times or 8 times your operating profit depends on whether you compare it with the right group of other companies.