Analysis and Discussion of Business Valuation Techniques and Actual Practices of Pakistani Construction Industry

Abstract

Business valuation has emerged as an important field of education and also recognized as usual practice in businesses around the world. There are several reasons behind the recognition of business valuation such as increasing number of mergers and acquisitions throughout the globe. Companies also perform valuation for taxation purposes. The recent financial crisis of 2008 brought financial distress in various firms globally, which urged them to either sell their businesses or to merge with other companies to ensure their survival. For these purposes, the usage of business valuation increased to such extent that it has now become a separate industry as number of firms throughout the world are offering their services to various small, medium and big firms for the valuation of their businesses. Because of this area got more attention and research which brought further changes in regulations and valuation approaches. There are many factors which can influence the way companies can be valued such as the accounting regulations. The criterion for valuation process could be different for different businesses as the pattern of business activities and operations differ from one industry to another (Imam et al., 2008). In previous literature, several techniques or methods are found such as balance sheet based techniques, income statement based techniques, good-will based techniques and cash-flow based techniques to find the value of a particular business unit or the whole company.