Blog

April 2021

10 components that placed the UAE among the first in global competitiveness indicators

The director of the “Truth” Economic and Management Consultancy Company, Reda Mosallam, said: The progress of the Emirates’ classification on the global competitiveness indicators was not the result of the moment, but this is due to several factors, foremost of which is the sustainable development of its work in government and semi-government departments, and the state’s spending on security and its security network which guarantees the protection of investor funds and the safe life of every expatriate on its land. In addition to its possession of a modern road network and airlines ranked among the largest airlines in the world and developed ports.

He pointed out that among those factors also is the presence of advanced legislation that attracts investors and the state’s spending of billions to confront the Corona pandemic, in a way that guarantees health safety and immunizes the population from the virus.

Among those factors also is the state’s possession of sovereign wealth funds that are among the top ten in the world, in addition to being one of the easiest countries to do business globally.

 

 

March 2021

Business valuation

Methods of valuation

Methods of valuation

 

Introduction:

We are interested in addressing valuation methods and methodologies as one of the most important methods that help to determine fair value, so that decision-makers can make their decisions on scientific grounds, to reduce the risks of results on random or individual decisions.

As known that there is more than one method and methodology for valuating companies or economic institutions, and we will review and monitor the most used methods in practical life.

It is also important  in this regard to remember that every method, or methodology has weaknesses, and many researchers, experts and consultants who have applied these methods to valuate companies or economic institutions criticize them, but we can only praise and appreciate the efforts of everyone who contributed and participated in coming up with the evaluation method and methodology.

In general, the valuation is intended to arrive at the real value of the “share” in the joint-stock companies, or the “stakes” in the limited liability companies, or the “rights” in the specialized financing funds, or the “bonds” in issuing debts of all kinds, whether local, regional or international. And the significance of the aforementioned capital units is that it is the unit of capital that expresses property rights, if it is accurately identified and expresses its true value, it is easy to arrive at the real value of the company or economic institution.

the valuation of companies and economic institutions are required for the following purposes:

  • Increasing the capital.
  • Reducing the capital.
  • Merging.
  • Acquisition.
  • Entering a strategic investor.
  • According to the financial and accounting policies that companies and economic institutions follow when preparing their annual financial statements … etc.

It is worth noting that there are more than one method for valuating companies and economic institutions – as will be mentioned – and the valuation methodology is determined according to the following:

  • The nature of the company or institution to be evaluated.
  • The availability of quality data and information on which each methodology and method are based.
  • The purpose of the evaluation. The capital increase or decrease, the entry of a strategic partner. etc.
  • The most commonly used valuation methods and methodologies

Read also :

The Importance of Business Valuation

What is feasibility study and how it affects in project management?

Investment Opportunities in Egypt

As previously mentioned, there are more than one method and for valuation, but we will review the most used methods, to be a scientific and practical reference for experts and consultants working at Truth Economic and Management Consulting Company, to choose the appropriate ones for application according to the nature of the project – the company or the economic institution – and below we review the most used valuation methods:

  • Using the rate of discounting future cash flows after it has been determined based on the components of the discount rate.
  • Using the “WACC” methodology as a discount rate for future financial flows.
  • Using the Capital Asset Pricing Model “CAPM” methodology.

More Valuation Methods :

The cost approach, which is not as commonly used in corporate finance, looks at what it actually costs or would cost to rebuild the business. This approach ignores any value creation or cash flow generation and only looks at things through the lens of “cost = value”.

Another valuation method for a company that is a going concern is called the ability to pay analysis.  This approach looks at the maximum price an acquirer can pay for a business while still hitting some target.  For example, if a private equity firm needs to hit a hurdle rate of 30%, what is the maximum price it can pay for the business?

If the company will not continue to operate, then a liquidation value will be estimated based on breaking up and selling the company’s assets. This value is usually very discounted as it assumes the assets will be sold as quickly as possible to any buyer.

5 Economic benefits to the UAE by expanding its “logistical passport”

The director of the “Truth” Economic and Management Consultancy Company, Reda Mosallam, said that the logistical passport initiative aims in the first place to revitalize the major economic sectors in the country by increasing the activity of the transport sector of all kinds, with good storage advantages and providing facilities for merchants from all over the world.
He pointed out that the announcement of the expansion of this initiative confirms that the wise leadership in the UAE has many and many initiatives that will dazzle the world and give it a better ranking among the countries of the world in a short time.
He explained that the UAE has successful components for this initiative before its launch and before expanding it as well, as it has a strong infrastructure network supported by multiple and different transport lines, including air and sea freight, giant aircraft, and various warehouses, in addition to having the largest container port in the world, which is Jebel Ali port and land ports with the Gulf Cooperation Council.

10 factors behind Dubai topping the list of the best financial centers in the region

The Partner Manager of the “Truth” economic and management consultancy, Reda Mosallam, said that one of the most prominent things that Dubai enjoys and has made it have a global position among the global financial centers is that it has strong and easy navigation and water lines, as you can travel to Dubai easily from anywhere and at any time as you get a visit visa in a few minutes, which is indeed the main reason that made it a regional and international hub for airlines and navigation lines.

He pointed out that among those factors also is the strong infrastructure that Dubai possesses and qualifies it successfully in holding international exhibitions, in addition to keeping pace with global events and developments, and the government race to be number one in all fields.

January 2021

Experts: Increasing the percentage of foreign ownership in “Etisalat” and “Du” increases foreign investment in the financial markets

The Managing Partner of the “Truth” economic & Management Consultancy, Reda Mosallam, said that: “The decision to raise the foreign ownership rate to 49% in (Etisalat) and (Du) will lead to an expansion of the investor base and an increase in foreign investment in the capital market as a whole, as well as raising the value of shares generally traded during the coming period ».

Mosallam expected that the UAE financial markets would succeed in gaining huge foreign investments, estimated at billions of dollars during the coming period, with the support of the decisions to raise foreign ownership rates, indicating that attracting foreign investment has become one of the most important goals of the UAE during the next stage, and all the necessary decisions are being taken to achieve This goal.

He noted that raising the percentage of foreign ownership in the telecommunications sector is a major step on the road to upgrading the UAE financial markets from “emerging” to “advanced.”

The Importance of Business Valuation

The Importance of Business Valuation

The Importance of Business Valuation

 

There are many reasons why Business Valuations are important. It is an essential input to many of the decisions that boards, management, regulators and investors make every day in modern business Such As:

  • Litigation
  • Exit strategy planning
  • Merging
  • Buying a business
  • Selling a business
  • Strategic planning
  • Funding
  • Selling a share in a business

 

Why is called business valuation ?

Determining the true value of a business, a process called “business valuation,” is not just important when the owner is looking to sell the company.

To obtain a business valuation, business owners may wish to contract with a professional appraiser to provide an opinion that will be viewed as independent and objective with the IRS. The resulting business valuation then may be used in a variety of planning applications.

Not all the methods adopted internationally can be fit locally; this fact is rarely considered, especially that the problem of estimating the fair value of assets and companies has become one of the most debatable issues in most of Arab countries.

 

How does the business valuation process work?

Business valuation is a process and a set of procedures used to estimate the economic value of an owner’s interest in a business. An accurate valuation of a closely held business is an essential tool for a business owner to assess both opportunities and opportunity costs as they plan for future growth and eventual transition. It provides either a point-in-time assessment of relative value for an owner, or perhaps the price a buyer would be willing to acquire the business.

 

Read Also :

What is feasibility study and how it affects in project management?

https://truth-uae.com/en/investment-opportunities-in-egypt/

 

Common Business Valuation Methods:

 

Asset Valuation

Company’s assets include tangible and intangible items. Use the book or market value of those assets to determine your business’s worth. Count all the cash, equipment, inventory, real estate, stocks, options, patents, trademarks, and customer relationships as you calculate the asset valuation for your business.

 

DCF Valuation:

In this valuation method we estimate the value of an investment based on its future cash flows. DCF analysis attempts to figure out the value of an investment today, based on projections of how much money it will generate in the future. The Discounted Cash Flows Method requires the following analysis – Revenue, Expense, Investment, Capital structure and Residual value analysis. It values the company considering:

  • Free cash flow to the firm (FCFF).
  • Free cash flow to equity (FCFE).

 

Book Value:

Book value is total assets minus total liabilities and is commonly known as net worth. The book valuation technique is usually used as a method of cross-testing the more common technique of applying multiples to EBITDA, cash flow, or net earnings.

 

Replacement cost

The cost approach is based on the logic of the principle of substitution. The concept is that prudent investors will not pay more for a property than they would for a substitute property of equivalent utility. As with the market approach, there are two potential starting points for a cost approach to valuation: reproduction cost and replacement cost.

Reproduction cost is the estimated cost, at current prices, to create an exact replica of the subject asset, using the same materials, construction techniques and standards, design, and quality of workmanship, and incorporating all the property’s deficiencies, over-adequacies, and obsolescence’s into this exact duplicate.

Replacement cost is the cost to replace an existing property with a new one of equivalent utility, as of a specified date.

Finally.. the concept of estimation and determination of fair value is extremely relative and complicated. Accordingly, it is very difficult to arrive at a conclusion whereby an accusation of detriment is hurled or a reform is praised. In witness whereof, in order to seek a fair judgment and objective thinking, we have first to ask about the basis and assumptions of evaluation if we really want to safeguard our sold assets.

 

The Importance of Business Valuation , Truth Economic & Management Consultancy

 

Resources :

https://masource.org/the-importance-of-business-valuation/

The UAE strengthens its forefront in Islamic finance globally after Corona

Reda Mosallam, partner and general manager of the “Truth” economic and management consultancy, said that the UAE and Dubai have declared that it is the capital of the Islamic economy, which is an economy as we know that depends on the instructions of the tolerant Sharia and adopts indicators such as murabahah.

He explained that the UAE issued to that position to be the capital of the world for the Islamic economy was not overnight, as it started since the seventies of the current century, when it developed legislation for the field of Islamic banking, indicating that it is as a result of the accumulated experiences of banks in the country and with the assistance of the Islamic Development Bank for excellence in The field of finance for all economic fields The UAE has been distinguished as a leading country in this field.

He indicated that targeting the state to develop legislation in the field of Islamic economics, especially the requirements for financing operations, enhances the role of the UAE in the same field in light of finding permanent solutions commensurate with modern economic developments. He pointed out that Islamic finance always fills the deficit that other types of financing, such as commercial financing or international financing, do not provide to meet the requirements of all economic sectors.

December 2020

Experts: The law provides a healthy economic environment to face the emergencies

Economic expert Reda Mosallam said, the law is in the matter of consumer protection, the sustainable development of a series of legislations and laws that support and enhance the global competitiveness of the state, entrench the concepts of the state’s protection of the consumer against fraud and imitation, and instill confidence in the souls of local and international consumers, who are in the state to shop.

He added: The law has closed some gaps in the previous laws, the most important of which are: ensuring the quality of the good or service, ensuring that the commodity is obtained at the declared and approved price by the official authorities, and ensuring that there is no hidden increase, in addition to the consumer obtaining his full rights before the seller, advertiser or agent After-sale service, as per years of warranty.

The launch of a unified tourist identity rediscover the fortunes of UAE

A recent report issued by the “Truth” Economic and Management Consultancy said that the launch of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, “May God protect him”, the unified tourism identity initiative, which contributes mainly to discovering the wealth of the UAE.

The report that the company assigned to the newspaper “The Vision” indicated that in light of the pandemic of the “Covid-19” virus that has swept the world and struck all over the globe and the whole world has been sitting in their homes for more than 4 months, flights have completely stopped, and all international tourism delegations have been canceled. Among the destinations of those delegations is the United Arab Emirates.

The partner and general manager of the company, Reda Mosallam, said that from here, the unified tourism identity initiative was launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister and Ruler of Dubai, “may God protect him”, to move strongly towards domestic tourism and rely on it. During the current period until the world’s life returns as it was before the pandemic, and then restructuring the tourism sector to face global tourism, including the local airlines (Etihad – UAE and others) to bring in those delegations.

He pointed out that the campaign “The Most Beautiful Winter in the World” has been launched, which is the first unified campaign for domestic tourism at the level of the UAE, and will continue for a period of 45 days, with the participation of all tourism agencies in the country, under the coordination of the Ministry of Economy, and with the support of the Media Office of the UAE government.

He explained that the campaign targets various groups of Emirati society, including citizens, residents and visitors, to encourage domestic tourism in the regions and emirates of the country as a whole, as one destination, while highlighting the characteristics and features of each emirate, and rediscovering the country’s natural, geographical and historical wealth, and the multiple attractions throughout the emirates of the state.

He emphasized that the state’s tourism sector is one of the most important sectors of the state’s domestic product, and this is due to several things, foremost of which is the state’s possession of the various types of tourism, for example marine tourism and the practice of marine mathematics, as it has the most beautiful beaches, their extension, diversity and calm waves.

He pointed out that one of those elements is conference tourism, as there are large areas and various places equipped with the latest means that help the two conferences to rest and reach the best decisions, adding that among those elements is shopping tourism and desert sports, because the state has advanced and large shopping centers that allow displaying the largest commodities. And others.

He explained that this sector contributes a large percentage to the gross domestic product, and also contributes to a strong and real addition to soft power, as the state exerts all efforts to form the mental image of the state regionally and internationally.

He indicated that among the most important of these efforts is the development of a unified identity of the state in all humanitarian, economic, tourism, media and scientific fields, and the strengthening of the UAE’s position as a gateway to the Arab region and its cultural stock and as the capital of the Arab world for culture, art, media, tourism and science.

He added that among those efforts is also the development of effective international networks with individuals and institutions around the world to serve the goals and interests of the state, in addition to consolidating the country’s reputation as a modern, open, tolerant and loving country for all peoples of the world.

8 factors enhancing the UAE’s position in the Arab and global competitiveness index

Reda Mosallam, director of the company “Truth” economic and management consultancy, told “alroeya” that the UAE has the two largest aviation networks in the region, “Etihad Airways” and “Emirates Airlines”, and has airlines with most countries of the world, as well as two commercial ports, “Jafza.” “And” Jebel Ali “, and we also do not forget the largest oil export port in the region on the Arabian Sea, which is the port of Fujairah, and this helped the country to be at the forefront of countries competing to attract foreign investment.

He pointed out that a series of legislations had been issued that help with competitiveness, for example the Competitiveness Law, which transformed the National Statistics Center into the Federal Competitiveness and Statistics Authority.

Mosallam explained that the UAE is characterized by high quality, and that it takes into account and exerts significant costs in quality and maintaining quality, safety standards and discipline, so any product in the Emirates is an internationally approved product and is known for its quality and compatibility with standards, whether in the foodstuff or manufacturing sector, all of this. Help the UAE to be at the forefront of the Arab countries.