Valuation Analyst

Article byWallstreetmojo Team
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

Who is a Valuation analyst?

In simple terms, a valuation analyst analyses an asset, a business, equity, real estate, commodity, fixed income security, etc., and then estimates an approximate value. They will use multiple methods to estimate the valuation since one approach wouldn’t work for every type of asset.

Let us look at one of the job profiles for a Valuation Analyst. Key responsibilities are listed in the below snapshot.

Valuation Analyst Job Profile

As we note, valuation analysts work on various assignments, including financial analysis of companies,  Discounted Cash Flow Analysis, Financial Modeling of companiesFinancial Modeling Of CompaniesFinancial modeling refers to the use of excel-based models to reflect a company's projected financial performance. Such models represent the financial situation by taking into account risks and future assumptions, which are critical for making significant decisions in the future, such as raising capital or valuing a business, and interpreting their impact.read more, reviewing debt and equity securities, valuation of Intellectual property, business valuations, intangible asset valuations, option valuations across multiple industries.

However, while performing the valuation analysis, she would chunk down the inherent aspects of each asset and look at all the factors.

For example, if an analyst looks at the valuation of a business, she may use theDiscounted cash flow analysis is a method of analyzing the present value of a company, investment, or cash flow by adjusting future cash flows to the time value of money. This analysis assesses the present fair value of assets, projects, or companies by taking into account many factors such as inflation, risk, and cost of capital, as well as analyzing the company's future performance.read more discounted cash flowDiscounted Cash FlowDiscounted cash flow analysis is a method of analyzing the present value of a company, investment, or cash flow by adjusting future cash flows to the time value of money. This analysis assesses the present fair value of assets, projects, or companies by taking into account many factors such as inflation, risk, and cost of capital, as well as analyzing the company's future performance.read more method. Under that method, she will look at all the future cash flows the business can generate and then turn them into present values to see the actual value of the business.

They look at various factors before they ever value a company or an asset. These factors are –

Let’s now look at the qualifications.

Key Takeaways

  • A valuation analyst analyzes assets, using multiple methods to estimate approximate value, considering various types of investments.
  • The tasks that valuation analysts work on include financial analysis of businesses, discounted cash flow analysis, financial modeling of companies, reviewing debt and equity securities, valuing intellectual property, valuing businesses, valuing intangible assets, and valuing options across various industries.
  • The valuation analyst career combines science and art, involving financial modeling and techniques. It requires constant learning, market understanding, market updates, and application. Ideal for those passionate about financial modeling.

Required skills of a Valuation Analyst

Let us look at the required qualification of a valuation analyst.

Valuation Analyst Qualifications

Video on Valuation Analyst

Valuation analyst career graph

If you want to be at the top level in your valuation analyst career, here is a snapshot –

Valuation Analyst Salary

Many candidates choose this profile because of their great career growth and decent compensation.

  • As a junior or senior associate, you can expect to earn around $60,000 to $90,000 per annum (the amount is inclusive of the bonus).
  • As a manager, you would earn around $90,000 to $150,000 per annum (the amount is inclusive of the bonus).
  • As a vice president, your earning (including bonus) would be around $150,000 to $300,000 per annum.
  • If you choose to continue on your path, you will become a company partner, and you will pay around $300,000 to $1 million per annum (including bonus).

Conclusion

The valuation analyst career profile is 80% science and 20% art. You would be involved with many financial modeling, valuation techniques, etc. At the same time, you need to make certain assumptions to conclude.

That’s why you need to constantly learn, understand the market, update yourself about what’s going on, and apply what you learn. Overall, the valuation analyst career is a great profile and will be suitable for those who love financial modeling.

Frequently Asked Questions (FAQs)

What methodologies and approaches do valuation analysts use to determine the value of a company or asset?

Market, cost, and income are the three primary types of valuation methodologies frequently used to determine the economic worth of firms.

What are the main challenges faced by valuation analysts?

The primary challenge for valuation analysts is to improve their analytical abilities and market knowledge to make correct value assessments.

What makes a good valuation analyst?

Valuation analysts must be skilled and self-assured communicators to support audit teams, provide comprehensive reports, and distill complicated financial analyses into information that senior managers, non-finance team members, and investors can understand.

How are valuation analysts different from investment bankers?

While valuation analysts and investment bankers work in finance, their roles are distinct. Valuation analysts specialize in determining the value of assets and businesses, providing crucial information for various purposes, including M&A deals. Investment bankers, on the other hand, focus on facilitating corporate finance transactions, such as mergers, acquisitions, IPOs, and capital raising, by connecting buyers and sellers and providing advisory services.

This article is a guide to who is a Valuation Analyst. Here we discuss the roles of a valuation analyst, career profile skills required, and salary expectations. You may learn more about Corporate Finance from the below articles –

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Comments

  1. Thomas Burke says

    Really insightful information.
    Thank you.

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