How to Value Your Company in Colombia?

Valuation is the business assessment that provides boards of directors and management with factors and figures related to the real economic value of the company in terms of market competitiveness, asset value, and expected income.

Specialized valuation helps understand the company’s potential sale value or a clear starting point for diagnosing its situation before facing the complexity of an M&A operation. These evaluations and diagnostics allow for identifying real access opportunities for potential investors in both the capital market and sectoral levels.

Valuation also facilitates share or equity interest appraisals related to a partner’s ownership or group of shareholders for tax, financial, and legal purposes, as well as in potential litigation.

In Colombia, only consultants registered in the Open Registry of Appraisers (RAA) under the Superintendence of Industry and Commerce are authorized to establish the value of a company, shares, or equity interests, in accordance with Law 1673 of 2013 and Decree 1074 of 2015, which regulates the commerce and industry sector.

There are many reasons to value a company: sale intention, IPOs, new shareholder entry, or even for exporters seeking to establish their market value. The RAA allows valuation under Category 1, known as "Operational Assets and Commercial Establishments," as regulated by Decree 1074.

When costs are high, an RAA-registered consultant in this category facilitates valuation, helping owners, partners, or potential buyers obtain a clear perspective of the real value of the company or equity interest, applying internationally accepted methods.

Gilberto Caicedo, director and associate consultant of HHC, explains that “different methods are based on discounted cash flows, liquidation value of assets and liabilities, capitalized earnings, comparative value, and EBITDA multiples.” The choice of method depends on the sector, company size, growth expectations, market penetration, management capacity, and innovation leadership.

To determine EBITDA multiples, analysts consider the average or median of comparable companies trading publicly or with recent market transactions, adjusted for industry indicators. Caicedo clarifies that “EBITDA is essentially operating income before interest, taxes, depreciation, amortization, or impairments.” However, EBITDA is not a substitute for net operating income or real cash flow.

In practice, analysts have observed that many entrepreneurs wishing to sell or capitalize their companies consider not only the economic value of their assets but also the work and effort invested. On the other hand, buyers or potential partners evaluate future financial potential and whether the purchase price aligns with expected returns. An objective valuation facilitates any negotiation or agreement between parties.

HHC provides specialized valuation services with a wide range of business micro-consulting products, supported by a team of experienced professionals. Whether for sale, partnership, or strategic planning, HHC offers precise valuation to ensure informed business decisions.

For inquiries, contact us via WhatsApp: +57 310 6691861, email: info@hhcglobal.com, or visit https://www.hhcglobal.com/valoracion.