Why tech company reviews are made up

The evaluation of IT companies is subject to special laws, because IT companies usually have no fixed assets, usually no patents or rights to which a value can be assigned.

Existing valuation methods such as the income value method or according to (DCF = discounted cash flow method) do not help either, since the interest rates are so low that even IT companies with low EBIT have a high mathematical value.

In practice, we also encounter methods in consulting cases that have no recognition in the industry or in front of the tax office, such as evaluation according to cocomo and the Stuttgart procedure.

Such evaluations by IT companies have no value, even if they were carried out by experts, because they are not recognized by the potential buyers.

We at connexxa Services Europe Ltd. have dedicated ourselves to this important topic and have "invented" a new method of evaluating IT companies that makes it possible to determine a "fair value". The method is also suitable for determining a possible "strategic value" for a known buyer.

The method is based on an assessment using so-called multiples. For the software industry, for example, these multiples are published in Finance magazine every 2 months.

In contrast to the common multiples method, however, we do not multiply the EBIT by the corresponding multiple. This would not be correct because the respective sales can have different values ​​for a buyer.

Another influencing factor is the condition of the company. We evaluate this as part of our "26 factor schemes that determine the value of an IT company". The questionnaire sometimes has several questionnaires per factor and is answered in the context of an interview and, if necessary. a "due diligence" in the company is queried and evaluated.

The result is a discount or premium factor that we take into account depending on the sales categories. The result is a weighted multiple / sales / EBIT multiplier that represents a "fair value".

Since potential buyers have a different view of the value of a company because they can achieve different benefits from the purchase object, we continue to evaluate the synergy / non-synergy potential - the result is an individual IT company value for the potential buyer.

In 2015 connexxa was founded by the Initiative Mittelstand Awarded for this IT company evaluation method in the subject area: "Knowledge Management".

On July 28, 2016, connexxa will hold a one-day seminar for IT entrepreneurs and auditors on the topic of "Successful company buying and selling". The method is presented in this special seminar.

Registration form-9-9-2016-Frankfurt