VALUATION: UNIQUE ASPECTS OF CALCULATING THE INDEMNITY OF EQUITY IN SMALL AND MEDIUM-SIZED COMPANY

Abstract

This article presents a methodology to calculate the value of equity in private, small and medium-sized company (SMC), using a case study in the Brazilian retail sector.  It also demonstrates a manner to determine the monetary expression of goodwill, considering the economic value of the business.  The methodological procedures involve the decomposition of the company into three aspects: the relations of partnership, the company establishment, and the business. This article discusses company valuation concepts, especially one’s approach to assets and income, while emphasizing discounted cash flow. Alternatives are presented for determining the discount rate to use in evaluating small and medium enterprises. At the end we calculated the economic value of the company, found the monetary expression of goodwill and determined the indemnity of equity shares.