Business Valuation — When and Why You Need It

Business valuation is a professional process that determines the economic value of a business or a package of shares. It is not just a theoretical exercise — there are specific situations, provided by law, where valuation is mandatory. Regardless of company size, knowing the real value of your business is an essential management and negotiation tool.

What Business Valuation Is — Definition and Legal Framework

Business valuation is the process of estimating the economic value of an entity, performed according to the International Valuation Standards (IVS) adopted in Romania by ANEVAR (National Association of Authorized Valuators of Romania). The valuation report is an official document, signed by an authorized valuator, usable in court, at the notary, at ANAF, or in commercial negotiations.

The Romanian legal framework (Law 315/2004 and GO 24/2011) establishes that the valuation of assets, including businesses, for certain legal purposes must be performed exclusively by ANEVAR-authorized valuators. A valuation report prepared by an unauthorized person has no legal value. At Geseidl, our valuators are active ANEVAR members with experience in business valuations across various sectors.

6 Situations When Valuation Is Mandatory or Recommended

1. Buying or selling a business — buyer and seller need an objective value as a starting point for negotiation
2. Mergers and acquisitions (M&A) — legislation requires valuation to establish the share exchange ratio
3. Divorce or succession — division of common assets requires company valuation at market value
4. Associate withdrawal or exclusion — Law 31/1990 provides for calculating share value based on the latest balance sheet or valuation
5. Bank credit guarantees — banks frequently require valuation for granting financing
6. Financial reporting (IFRS) — impairment tests and purchase price allocation require independent valuation

IVS Valuation Methods (Income, Market, Cost)

IVS standards provide three fundamental approaches, and the valuator applies those relevant to the specifics of the enterprise being valued:

• Income approach (DCF) — value is determined by future cash flows discounted at a discount rate. Most commonly used for profitable companies with a stable track record.
• Market approach (comparables) — comparison with recent transactions on similar companies (EBITDA multiples, P/E). Suitable when a relevant benchmark exists.
• Cost approach (net assets) — asset value minus liabilities. Relevant for companies with significant tangible assets (real estate, manufacturing).

How Long It Takes and How Much a Professional Valuation Costs

Duration depends on complexity: a standard valuation for an SRL with simple operations takes 2-3 weeks; a complex valuation (multiple locations, diverse assets, international transactions) can take 4-8 weeks. Cost varies: from 2,000 EUR for small/medium companies with simple operations, to 10,000+ EUR for complex valuations or in litigation contexts.

Why It Matters to Choose an ANEVAR-Authorized Valuator

An ANEVAR valuator follows a strict code of ethics, has professional insurance obligations, and is subject to the association's quality control. Their report is accepted by courts, notaries, banks, and ANAF. A report prepared by an unauthorized person can be challenged and invalidated in any legal proceeding.

At Geseidl Consulting Group, we combine valuation expertise with financial audit, providing a complete picture of the enterprise's value and financial health. This integrated approach reduces total time and cost by eliminating duplication of analytical effort.

Need professional business valuation? The Geseidl Consulting Group team, CECCAR Prahova leader for 18 consecutive years, is ready to help. Discover our services or contact us for a free consultation.