Test the assumptions behind the asking price
For a buyer, a valuation is useful when it links the price to the expected cash flows and risks. Consider customer retention, sustainable margins, management continuity and the investment required after completion.
Separate value from financing
A purchase can look affordable under one financing structure and challenging under another. Debt repayments and funding availability do not, by themselves, establish what the target is worth. Assess the business and the funding assumptions explicitly.
Use valuation alongside due diligence
Valuation and due diligence answer related but different questions. Financial, commercial, legal and tax findings can change the assumptions in the valuation. The engagement should specify what will be reviewed and which work is outside scope.