Determination of Business Port Terminal Value Using Income Approach

Under PT X's long-term plan to increase the company's value, PT X plans to acquire one of PT Y's container terminal business units. The acquisition requires several stages of the process from due diligence to estimation of the acquisition value obtained from the valuation results. Business valuation as a critical stage is a process to produce an opinion or an estimate of the fair value of a company. The results of the business appraisal can then be used in investment \ decision making, generally for business development, mergers, and acquisitions. There are 3 (three) approaches in conducting business valuation, namely asset-based approach, market-based approach, and income-based approach. This research will focus on the company's acquisition plan using income approach (income-based approach). This approach is used by considering the going concern assumption, or the business that is being assessed will continue to run and generate revenue. Two methods can be used to determine the value of a business in income approach (Income-based approach), namely the method of income capitalization (capitalized of income method) and discounted cash flow method (discounted cash flow). This study aims to determine the business value of PT Y's container terminal business unit and the maximum acquisition value used as a consideration in the acquisition. This research uses an income-based approach with a discounted cash flow (DCF) method. The making of financial models begins with making a profit and loss terminal container service projection, then the free cash flow calculation is performed. Furthermore, based on the free cash flow that has been calculated with a discount rate from the Weighted Average Cost of Capital (WACC) which provides the total value of all company capital, the company value that represents the value of the container terminal unit is Rp. 9,171,633,437,067. To find out the maximum acquisition value obtained by calculating the company's return on investment that refers to the cost of capital of PT X. To get a positive rate of return, the IRR value must be greater than the WACC. Under the calculations, the maximum acquisition price of Rp. 7,500,000,000,000 (IRR 9.66%) with a WACC value of PT X of 7.6%. The results of this calculation become material in the acquisition process with PT Y as the owner of the container terminal.