Company Valuation: The Most Widely Used Valuation Methods in Bulgaria

The main objective of this research paper is to discuss the approaches, methods and models used for the valuation of companies. The valuation of companies is a serious challenge for financial analysts and appraisers all over the world, due to the fact that value is invisible and difficult to find. This is one of the reasons for the high number of methods and models developed for this purpose, as well as the many different classifications for them. One of the challenges is the selection of the appropriate combination of methods. This research starts with an overview of other studies about the most preferred valuation methods by certified financial analysts in Europe and the world as a whole. The studies indicate that only few methods and models are intensively used by analysts. The most preferred and widely used methods by them are the relative methods, followed by the DCF enterprise model. A survey was conducted by the author among actively operating certified appraisers in Bulgaria. The survey shows that, in general, Bulgarian appraisers prefer and use mostly the same methods that are used by financial analysts in Europe and other international markets. Still, there are some curious differences – the DCF enterprise model is again very intensively used, but the confidence in the relative valuation methods, according to respondents, is very low in Bulgaria. At the same time, the other widely applied method by appraisers in Bulgaria is the net asset value (NAV) method, contrary to the fact that they do not particularly trust it.