Competitive Positioning & Valuation Analyses | Business Valuation
In today’s competitive world, there has been a spate of mergers and acquisitions, significant private equity investments, reforms in taxation laws, higher use of principle of fair value in accounting standards, etc necessitating the need for determining the value of the shares, assets and liabilities so transferred.
The business landscape has changed completely, there is a paradigm shift in the focus from just increasing company’s share price to creating value through financial decision making. Today, valuation is the talk of the business. Valuation is the epicenter of financial decision making. If a firm wants to achieve the ultimate goal of maximizing value of its owners, then it is necessary to understand valuation.
The valuation analysis done is based on careful consideration of the facts and circumstances after taking insight into the relevant valuation methodologies and approaches.
Equevo routinely assists clients with the valuation of businesses and business interests, as well as tangible and intangible assets and complex, hard to value securities. Our professionals have the expertise and experience to satisfy any business or asset valuation needs.
There are various reasons for which a business owner or an individual may need to know the value of its business (or its assets be tangible or intangible assets ) such as:
Strategic Decision Making
- To evaluate an offer and negotiate a strategic sale of a business;
- For shareholder or partnership investments or buyouts;
- Strategic value analyses for fund mobilisation (including providing asset as a security/ collateral), acquisitions, divestitures and joint ventures;
- To justify the value of a company for annual shareholder meetings;
- To undertake division wise valuations so as to identify weak divisions of a business; this may be to refocus the operational efforts or to divest the under-performing divisions;
- Restructuring valuation advice for mergers, demergers, slump sale and spinoffs; and
- To value a portfolio of Intellectual Property Rights – patents, trademarks, copyrights, proprietary processes, etc;
- To set a current baseline value of the business and develop a strategy to improve the profitability of the business and increase the value of the business in future;
- To identify whether the business is growing, stagnant or declining in value to restructure the business;
- Legal, dispute and tax issues, valuation of claims, fairness opinions.
Regulatory Requirements
- Valuation as per various provisions of the Companies Act 2013;
- Valuations for cross-border share transactions between resident and non-resident entities per Foreign Exchange Management Act (‘FEMA’) guidelines;
- Valuations under Insolvency and Bankruptcy Code, 2016;
- Income Tax Act, 1961 (including transfer pricing) related valuations and;
- Valuation under SEBI – SEBI (Listing Obligations and Disclosure Requirement) Regulations.
Financial Reporting
- Share valuation for goodwill and asset impairment testing under Indian Accounting Standard (“Ind AS”) 36;
- To allocate the purchase price after the acquisition of a business;
- Intangible asset valuation for business combinations under Ind AS 103; and
- Employee stock option plan (“ESOP”) valuation under Ind AS 102.
