How the Business Valuation Process Works in 2025

In 2025, business valuation is not just about numbers — it’s about strategy, compliance, and trust.
Whether you’re raising funds, planning an exit, resolving disputes, or acquiring a company, an accurate valuation defines the real worth of your enterprise.

Talk to Valuation Expert , we conduct data-driven, regulator-compliant valuation reports that help businesses make confident financial decisions.
Let’s explore how the business valuation process really works — step by step.

✅ Business valuation follows a structured, step-by-step process.
✅ Requires audited data, industry benchmarks, and normalized accounts.
✅ Must include risk adjustments and sensitivity analysis.
✅ Ends with a defensible, certified valuation report.
✅ Only registered valuers (IBBI/SEBI recognized) can issue legal reports in India.

Business valuation serves multiple purposes:

• Determining fair value for financial reporting or investor negotiation.

• Supporting mergers, acquisitions, and fundraising decisions.

• Establishing equity for share valuation or ESOP issuance.

• Providing defensible numbers for litigation, buy-sell, or partnership disputes.

• Enabling strategic planning, restructuring, or exit strategies.

1. Define Scope & Purpose of Valuation

The process begins by identifying:

• The ownership interest to be valued

• The valuation date and purpose (funding, merger, compliance, etc.)

• The premise of value (fair market, liquidation, or investment value)

Clarity at this stage ensures that the valuation is compliant, transparent, and fit for purpose.

2. Collect Financial & Legal Documents

The foundation of every valuation is credible data.
Typical documents include:

• Audited financial statements (3–5 years)

• Balance sheets & income statements

• Tax returns & cash-flow data

• Shareholder or partnership agreements

• Contracts, leases, and insurance documents

This helps valuers understand both the financial and legal ecosystem of the company.

3. Analyze Economic & Industry Conditions

Valuation isn’t done in isolation — market context matters.
Analysts examine:

• National and global economic trends

• Industry growth rate, competition, and regulatory factors

• Impact of inflation, demand cycles, and geopolitical conditions

This step benchmarks your company’s performance against market realities.

4. Review Financial Performance

Valuers assess the company’s:

• Historical earnings and profitability

• Asset quality and debt structure

• Working capital efficiency

• Comparison with industry peers and averages

The goal: to identify whether the business is over-performing or lagging behind.

5. Normalize Financial Statements

Normalization adjusts past data to remove anomalies such as one-time gains, non-recurring losses, or personal expenses.
It helps reveal the true earning potential and ensures future projections are realistic.

6. Apply Valuation Approaches

Valuers use one or a combination of the following three global methods:

The chosen method depends on industry, business model, and valuation objective.

7. Apply Discounts & Premiums

Valuation is refined using adjustments such as:

• Discount for lack of marketability (DLOM) – applied when shares are not easily tradable.

• Control premium – added for controlling interest.

• Minority discount – applied when ownership lacks decision power.

These adjustments reflect real-world investor behavior and market dynamics.

8. Reconcile the Results

Each valuation method produces a different figure.
Reconciliation blends these results using weighted averages, professional judgment, and sensitivity analysis — ensuring a balanced and defensible conclusion.

9. Prepare the Draft Valuation Report

The draft report includes:

• Methodologies used (Asset/Income/Market)

• Supporting data and assumptions

• Risk factors and sensitivity analysis

• Calculated value range

Clients review and validate the report before certification.

10. Issue the Final Certified Valuation Report

Only IBBI-registered or SEBI-recognized valuers can issue certified valuation reports in India.
The final document becomes a legally valid record — used for fundraising, mergers, audits, or regulatory filings.

Accurate valuation requires technical, financial, and regulatory expertise.
Errors or assumptions can distort enterprise value — leading to audit issues or poor deal outcomes.

That’s why businesses rely on experts like RNC Valuecon LLP, who bring:

• 35+ years of multi-industry valuation experience

• Empanelment with nationalized banks & NBFCs

• Compliance with IBBI, SEBI, and Companies Act

• Transparent methodologies & defensible reports

A mid-sized IT firm approached RNC before raising equity funding.
Their internal estimate valued the company at ₹45 crore.
After normalization, market benchmarking, and DCF analysis, the actual value stood at ₹58 crore.

✅ Investors agreed at the new fair value.
✅ Founders retained higher equity.
✅ The deal closed smoothly with no post-audit disputes.

That’s the power of professional valuation.

Understanding how the business valuation process works gives you financial clarity — whether you’re raising capital, merging, or planning an exit.

In 2025, valuation isn’t optional — it’s a compliance, governance, and strategic necessity.
Partner with RNC Valuecon LLP, one of India’s most trusted valuation and advisory firms, to unlock your business’s real value.

Need a certified business valuation report for funding, mergers, or compliance?
Contact RNC Valuecon LLP for expert-led, regulator-approved valuation services trusted by India’s leading financial institutions.

1. What is the first step in business valuation?

The first step is defining the purpose and scope of valuation — identifying what needs to be valued, for what reason (fundraising, merger, compliance, etc.), and collecting accurate financial and legal data to begin the process.

2. Why is normalization important in valuation?

Normalization eliminates one-time or non-operational income and expenses.
It ensures the company’s financials reflect true recurring performance, helping valuers assess realistic earning potential and fair value.

3. Which valuation methods are used in the process?

Valuers generally apply three global methods:

• Asset Approach (NAV): Focuses on tangible and intangible assets.

• Income Approach (DCF): Projects future earnings and discounts them to present value.

• Market Approach: Compares similar companies or transactions.
  Often, a combination of methods is used for cross-verification.

4. How are risks factored into a valuation?

Risks are included through discount rates, sensitivity analysis, and growth assumptions.
This helps adjust the final valuation for market volatility, industry changes, and business-specific uncertainties.

5. Who can conduct a certified business valuation in India?

Only IBBI-registered or SEBI-recognized valuers are legally authorized to conduct and issue certified business valuation reports in India.