The valuation of a company is based on 2 things. There is the technical valuation of the company, which is arrived at using one of the 3 popular valuation methods - the DCF, comparable trading or comparable acquisition.
Nov 01 2013 11:03 AM
Each of these 3 different technical valuation methods will give a different valuation for a company. Apart from that there is also the market based valuation of a company, which is based on supply and demand.
No matter what the technical valuation of the company are, the market valuation of the company is determined by how well the company is doing, what are the demand for the company shares, how many of them want to buy the company or how desperately the company is ready in the position to sell itself.
This will determine the price of the company. Hence, the technical valuation of a company will set a basic benchmark to start running a company, whereas the market valuation of a company will finally determine what is going to be the final price somebody is going to buy or sell a company.