1. Introduction

For many entrepreneurs in the UAE, business growth comes with tough questions: “What is my company really worth?”

Whether you’re raising investment, restructuring ownership, planning succession, or negotiating with banks, the answer lies in business valuation.

Valuation isn’t just a financial exercise. It’s a strategic tool that helps business owners understand their true market position, earning potential, and risks. At Crevaty, we have prepared valuation reports across multiple industries in the UAE, designed to be audit-ready, regulator-compliant, and investor-friendly.

This guide walks you through the basics of business valuation—what it is, why it matters in the UAE, how it’s done, and what you need to prepare.

2. What is Business Valuation?

Business valuation is the process of determining the fair market value of a company. Fair market value is the price that a willing buyer would pay and a willing seller would accept in an open transaction.

Unlike accounting numbers, valuation is forward-looking. It combines financial results, market conditions, industry risks, and growth potential to determine what your business is truly worth today—and tomorrow.

3. Why is Business Valuation Important in the UAE?

The UAE is one of the world’s most dynamic business hubs. Entrepreneurs here face both opportunities and competition. A professional valuation becomes critical in situations such as:

• Raising Capital: Investors demand independent valuation before buying equity.
• Mergers & Acquisitions: Ensures fair pricing in complex deals.
• Shareholder Restructuring: Very common in family businesses (succession planning, heirs joining, or share redistribution) and free zone companies (where partners frequently enter or exit). It is also required in mainland companies during ownership transfers, partner exits, or foreign ownership conversions.
• Bank Financing: Many banks require valuation to support loan approvals.
• Strategic Planning: Entrepreneurs use valuation as a performance benchmark and decision-making tool.

Without a valuation, entrepreneurs risk undervaluing their company in negotiations or overestimating growth potential, which could harm financing or exit opportunities.

4. How Business Valuation is Done – The Main Approaches

There is no single formula for valuation. Professionals combine multiple approaches to arrive at a balanced conclusion:

4.1 Income Approach

• Discounted Cash Flow (DCF): Projects future cash flows and discounts them back using a risk-adjusted rate.
• Dividend Growth Model (DGM): Values the company based on future dividends, assuming stable growth.

4.2 Market Approach

Compares your company with similar businesses or recent transactions. In the UAE, this can be limited by the lack of listed comparables but is useful when data is available.

4.3 Adjusted Net Asset Approach

Calculates the value of the company’s net assets after adjusting to fair market value. Often applied for asset-heavy companies.

At Crevaty, we typically use a blend of these methods to reflect both current worth and long-term potential.

5. Why Assumptions Matter

Valuation is often described as part science, part art. While models are built on numbers, the output is highly dependent on assumptions, such as:

• Revenue forecasts based on contracts and pipeline.
• Cost structures and operational efficiency.
• Market growth rates (e.g., UAE GDP growth projections).
• Sector-specific risks (construction, trading, services, etc.).
• Financing structure (equity vs. debt).

A small change in these assumptions can create a wide variation in results. That’s why credible valuation reports include sensitivity analysis—showing how value changes under different growth rates, costs, or discount factors.

6. Practical Insights for UAE Entrepreneurs

• Industry Impact: A trading company, consultancy firm, or EPC (Engineering, Procurement, and Construction) contractor will each require a different valuation approach.
• Free Zone vs. Mainland: Licensing structure, compliance costs, and tax exposure affect business value.
• Compliance is Critical: Non-compliance with VAT, corporate tax, ESR, or AML reduces confidence in financials.
• Goodwill Matters: Intangibles like brand reputation, client loyalty, and contracts can form a significant part of business value.
• Documentation Drives Credibility: The stronger your financial records and reporting, the more defensible your valuation becomes.

7. Business Valuation Checklist

11 Things UAE Entrepreneurs Should Prepare Before a Valuation

1. Company License & Legal Documents – Trade license, MOA/AOA, shareholder agreements, amendments.
2. Historical Financial Statements – Audited accounts (3–5 years minimum).
3. Management Accounts & MIS Reports – Monthly/quarterly accounts, cash flow statements, performance reports.
4. Business Plan & Strategy – Clear outline of objectives, markets, and growth initiatives.
5. Forecasted Financials (3–5 Years) – Projected income statements, balance sheets, and cash flows.
6. Tax Compliance Records – VAT, corporate tax, ESR, AML/goAML confirmations.
7. Contracts & Pipeline – Ongoing contracts, pipeline projects, supplier agreements.
8. Assets & Liabilities Register – Fixed assets, outstanding loans, shareholder balances.
9. Employee & HR Information – Payroll, key employee contracts, gratuity obligations.
10. Bank Statements & Financing Documents – 6–12 months’ statements, facility agreements.
11. Other Supporting Documents – Industry reports, certifications (ISO, EIAC), litigation or dispute disclosures.

Tip: Forecasted financials are one of the most critical parts of valuation. Investors and banks rely on these projections to assess your company’s future earning capacity. They should be realistic, based on market data, and supported by historical trends.

8. Why Work with Specialists Like Crevaty?

Many UAE entrepreneurs attempt quick, internal calculations to estimate value. But when faced with investors, auditors, or regulators, these “rough numbers” rarely stand up.

At Crevaty, our valuation reports are:

• Methodology-driven – We apply income, asset, and market approaches.
• Transparent – Every assumption is clearly documented.
• Audit-ready – Structured to satisfy auditors, banks, and regulators.
• Practical – Tailored to the UAE regulatory and business environment.

We don’t just deliver a report; we provide insights that help entrepreneurs negotiate better, plan smarter, and grow stronger.

9. Final Thoughts

Business valuation is more than a financial metric—it’s a strategic compass. For UAE entrepreneurs, it is often the difference between closing a successful deal and losing leverage.

The key is to see valuation not as a one-time exercise, but as an ongoing measure of performance and potential.