How do you value a company in the United Arab Emirates?(Examples)
There can be many reasons why a business owner wants to value their company. Business valuation is important whether to buy, sell, transfer shares, or attract investors. Company valuation in the UAE involves finding a business’s true value, which helps forecast future goals. This valuation helps make informed decisions and is a base for the company’s success.
Various factors influence company valuation in the UAE, such as market size and potential, the uniqueness of products and services, the management team’s expertise, and technological innovation. All these factors must be considered when valuing a business.
Company valuation requires high-level financial analysis, which a qualified expert with proper credentials should perform. Otherwise, business owners might miss the complete benefit of a company valuation. In this blog, we will cover the basics of company valuation in the UAE, its importance, and how an expert can help you value your business to the best of its ability.

Company Valuation in the UAE
In the UAE, company valuation is necessary during mergers, acquisitions, investments, and legal disputes. It helps determine the FMV of shares and pricing a company will cover its management, capital structure, possibilities of future profits, and asset market value.
Different industries in the UAE may have unique valuation processes and concerns. For example, companies in the oil and gas sector may have a different valuation than those in technology or finance.
Engaging qualified valuation specialists or consultancy firms with knowledge of the UAE market and regulatory requirements can be beneficial. These experts can adapt insights and approaches to the unique company evaluation conditions.
Importance of Company Valuation in the UAE
Company valuation in the UAE is important for several reasons: Valuing the company helps determine its worth, ensuring that mergers, acquisitions, or sales occur at its true value. Company valuation in the UAE can estimate a business’s current standing, letting it assess its position in the competitive market. Company valuation provides a way to track the company’s growth and changes.
While getting funds from venture capitalists, private equity firms, or angel investors is necessary, a company valuation is essential to attract investment. Investors need to know the company’s worth before committing capital.
Proper company valuation in the UAE helps comply with tax regulations and legal requirements. It determines the tax liabilities linked with asset transfers and other transactions, reducing the risk of disputes.
Factors that affect company valuation in the UAE
Company valuation is a complex process in which many factors influence the company’s worth. Below are some factors that affect the company valuation in the UAE.

- Market Conditions – The market’s potential can greatly impact a business’s value. A strong market with high demand for products and services can improve a company’s worth, but an economic crisis might reduce it.
- Financial Performance – A company’s income and cash flow determine its value. A business with consistent revenue will be more valuable than one with irregular earnings.
- Intellectual Property—Patents, trademarks, copyrights, and trade secrets can all add value to a company by providing a competitive advantage and the potential for future growth.
- Industrial Developments—Current industry trends can impact a business’s value. For example, a company with significant growth and development potential will likely be worth more than one in a declining industry. Similarly, new and innovative business plans and technology can improve a company’s value.
Apart from all these, the location of the business, debt and capital structure, and tax policies can also affect the company valuation in the UAE.
How do you calculate company valuation in the UAE?
Calculating company valuation in the UAE involves various methods, each customized to suit the specific nature of the business and its operating environment. Choose the appropriate valuation method to meet the valuation’s goal.
What are some common company valuation methods in the UAE?
Below are some of the company valuation methods in the UAE.
- Asset approach
- Income approach
- Market approach
Now, let’s discuss each of the approaches in detail.
Asset Approach
The asset or cost approach of company valuation in the UAE determines a company’s value by adding up the fair market value of its net assets. It shows the real worth of a company’s assets and the owner’s ability to sell or liquidate them.
This method is applicable when the value of assets is very high, i.e., it is used for asset-heavy valuations, getting support from technical valuers. Consider both the company’s tangible and intangible assets. Calculate the market or book value of the company’s assets to determine the overall worth.
Case study for Asset Approach Valuation method in UAE
The Net Asset Value (NAV) method is a simplified version of the asset-based approach. Here’s a small example for a construction company:
Company: Reliable Builders, Abu Dhabi
Assets:
- Land: A plot designated for a future construction project (valued at market price) – AED 20,000,000
- Construction Equipment: Fleet of vehicles, machinery, and tools (valued at net book value with adjustments) – AED 10,000,000 (book value) – AED 2,000,000 (depreciation) = AED 8,000,000
- Inventory: Building materials for ongoing projects (valued at cost price) – AED 5,000,000
- Work in Progress: Partially completed construction projects with a calculated value based on percentage of completion – AED 3,000,000
- Cash & Cash Equivalents: Available funds in bank accounts – AED 1,000,000
Liabilities:
- Bank Loan: Outstanding loan used for equipment purchase – AED 4,000,000
- Accounts Payable: Amounts owed to suppliers for materials – AED 2,000,000
Net Asset Value Calculation:
- Total Assets:
- AED 20,000,000 (Land) + AED 8,000,000 (Equipment) + AED 5,000,000 (Inventory) + AED 3,000,000 (Work in Progress) + AED 1,000,000 (Cash) = AED 37,000,000
- Net Asset Value:
- AED 37,000,000 (Total Assets) – AED 4,000,000 (Loan) – AED 2,000,000 (Payables) = AED 31,000,000
Income Approach
The income approach of business valuation uses the expectation principle to calculate the company valuation in the UAE. To do so, calculate the returns that business owners can expect from a relevant business. Balance these returns against the risk of obtaining them fully and on time.
Returns are either a single value or a steady flow of revenue that the business owners can expect to receive in the future. The risk is then measured using capitalization or discount rates. The direct capitalization approach uses a single measure of business earnings and discounted cash flow (DCF) to use the ongoing income source.
Case study for Income Approach Valuation method in UAE
A prominent UAE hotel chain with steady cash flow and moderate growth. To value this company, we’ll use a 12% discount rate reflecting its risk.
Steps for DCF Valuation:
Forecast Cash Flows: Project future cash flows. Here’s a sample for the next five years:
- Year 1: AED 5,000,000
- Year 2: AED 5,500,000
- Year 3: AED 6,000,000
- Year 4: AED 6,500,000
- Year 5: AED 7,000,000
Terminal Value: Assume a 2% perpetual growth rate after year 5. The terminal value is approximately AED 87,500,000.
Discount Cash Flows: Discount each year’s cash flow to present value using the 12% discount rate. The present value (PV) of each cash flow can be calculated using the formula:
PV = Cash Flow / (1 + discount rate)^number of years
The present values of cash flows are:
- Year 1: AED 4,464,286
- Year 2: AED 4,008,929
- Year 3: AED 3,586,864
- Year 4: AED 3,195,465
- Year 5: AED 2,832,521
- Terminal Value: AED 52,884,615
Total Present Value: Sum the present values of all cash flows and the terminal value. This gives us the company’s enterprise value, around AED 70,972,680.
Market Approach
The market approach uses data from comparable transactions, ideally within the same sector and location, to determine company valuations in the UAE. This approach can be used in a stand-alone way only if comparable transactions have occurred recently and reliable data exists for a relevant analysis. The market approach is a reliable way to determine a company’s worth.
This approach involves studying comparable companies in the same industry. Business professionals use this strategy to identify variations in how competitors set pricing, make profits, and consider other important factors in company valuation.
Case study for Market Approach Valuation method in UAE
A promising UAE-based food delivery app startup is being valued using the market approach. Here’s how it might work:
- Comparable Companies: Two similar food delivery startups in the region are identified. Startup A was acquired for $20 million with a yearly revenue of $10 million (2x revenue multiple). Startup B went public with a market capitalization of $50 million and a yearly revenue of $15 million (3.3x revenue multiple).
- Valuation Range: Based on these acquisitions, a reasonable revenue multiple for the food delivery app could be between 2x and 3.3x.
- Adjustments: The food delivery app has even faster year-on-year growth than the comparable companies. A slightly higher multiple, say 3.5x, might be justified to account for this higher growth potential.
- Valuation Estimate: If the food delivery app generates $5 million in yearly revenue, applying the 3.5x multiple will result in a valuation estimate of $5 million * 3.5 = $17.5 million.
Step-by-Step Guide to Company Valuation in the UAE
Below are the steps involved in company valuation in the UAE
Define Your Valuation Needs | |
Research Valuation Methods | |
Prepare Documentation | |
Select an Experienced Valuer | |
Clarify Scope and Contracts | |
Participate in the Valuation Process |
Challenges and Considerations in Company Valuation
Despite its many advantages, various factors influence a few demerits in company valuation in the UAE. Below are some of the challenges and considerations often found:
- Subjectivity in Valuation Methods: Different valuation approaches can give different findings, and deciding on the best method and assumptions is sometimes subjective. Analysts must use their judgment to choose the best method for the company, considering its industry, stage of development, and market position.
- The complexity of Assessing Intangible Assets: Intangible assets such as intellectual property, brand value, and customer relationships are important in determining a company’s valuation in the UAE. However, assessing these assets might be difficult as they need physical appearance. A professional expert must use advanced techniques to value intangible assets and depend on market comparables effectively.
- Impact of Market Volatility and Technological Advances: Market conditions and market changes can greatly impact company valuations in the UAE. Rapid technological advancements might make certain assets outdated and generate new revenue sources, affecting future cash flows and growth possibilities. Market volatility may affect valuation multiples and discount rates. So, professionals should consider these changes and modify their models accordingly.
- Importance of Professional Expertise: Company valuation in the UAE involves thoroughly understanding finance, accounting, industry trends, and economic changes. While valuation models provide a structured system, calculating the results and making the best decisions need knowledge and experience. Professional valuation experts have industry-specific expertise, analytical skills, and a detailed understanding of market trends in the valuation process, improving its accuracy and reliability.
Get a Company Valuation in the UAE from Eqvista!
Company valuation is an important process for any business that plans to buy, sell, or attract investors. If done independently, the owners might miss the nuances of valuation and end up selling or buying the company at incorrect costs.
Sometimes, it is common to misinterpret the company’s worth as many times as EBITDA (earnings before interest, tax, depreciation, and amortization). But that does not cover industry, business risks, cash flow expectations, and debt. Hiring a professional valuation expert will be a smart decision to prevent that. For these reasons, the company valuation cost can be a good investment. Sometimes, it may save money by paying the right price or deciding to invest in a worthy business.
In Eqvista, we have certified professionals with finance and accounting expertise who can help you get an accurate company valuation. To learn more, contact us today!