Business Valuation
“What’s a Business worth?”
Valuation is often the first point of negotiations and plays a critical role in any transaction. The asset could be either a business or business undertaking, equity shares, preference shares, convertible shares, redeemable shares, intangible or tangible assets.
Business valuation is undertaken to ascertain the Fair Value (fundamental intrinsic value using Income and Asset approach) and Market value (Relative value) in order to understand and then attempt at reducing the gap between intrinsic and market value for value creation of companies before undertaking any corporate actions be it M&A, fund raising, ESOP, dispute resolution etc.
Our team understands that Business Valuation is beyond the numbers.
We invest our time working to understand the business dynamics of company and its business segments (including its past history), financial model with underlying assumptions, its key value drivers, Industry and peer trends, financial analysis and forecast review etc. to derive the fair value. We draw on our extensive experience and apply suitable valuation methodologies after adequate analysis and following our proprietary processes. We combine this with our deep sector knowledge and benchmarking analysis to offer value-added advice to our clients by applying Income, Asset and Market approaches.
We can help you in:
- Independent assessment of any Business / Assets to determine the right price to pay or accept for a business or Assets or against settlement of Liabilities
- Valuations of closely held companies, businesses, shareholding, brands, technology, contracts, know-how and other intangible assets
- Valuations of Joint Ventures
- Valuations for litigation or arbitration in business valuation disputes
- Valuation of minority shareholders for corporate governance or regulatory purposes
- Valuation opinions for unquoted debt instruments in accordance with FIMMDA guidelines
- Complex valuations including Preferred Stock valuation using Back Solve Option Pricing model
- Valuation of Financial Instruments including Optionally Convertible Debentures (OCD), Compulsorily Convertible Debentures (CCD) etc.
- Valuation of Derivatives using Black Scholes, Binomial and Monte Carlo Option Pricing models
- Valuations for regulatory purposes including the Companies Act, Income Tax Act, FEMA, SEBI Laws, Insolvency Code etc.
- Valuations for financial reporting purposes under IND AS (Purchase Price Allocation, Fair Value under IND AS 113, Impairment Assessment under IND AS 36, Financial Instruments under IND AS 109, Ind AS 32 and Ind AS 107 etc.)
- Performing Scenario Analysis and Sensitivity simulation.
Valuation of Brands, Intangible Assets & Intellectual Property
“If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trademarks, and I would fare better than you.” — John Stuart, Chairman of Quaker.
Brand today is undoubtedly one of the most valuable assets of an Organisation and has certainly come a long way from the time when it was merely considered as just another word or Logo. The Brands have huge economic impact due to their capability to influence the choices of customers, employees, investors and government authorities.
In today’s world with rapid progression and advancement in technology, there is dramatic shift in the good and services being offered by companies with greater reliance on artificial intelligence, digitalization and data services. The onset of COVID Pandemic (2020) accelerated digital transformation with large number of companies providing as well as getting benefitted with cloud-based tech and streaming services. The Companies, are now investing more and more into intangible assets like technology, software, customers and brands, in addition to physical assets and property, plant and equipment. Intangible Assets also results in higher profits and exponential growth of businesses and companies and thereby increasing their ROCE resulting in enhanced profitability and better cash flows.
Investors, lenders and other stakeholders are getting increasingly alert to the importance and valuation of Intangible Assets. Understanding and appreciating Intangible Assets, Lenders are now giving out loan funds against Intangible assets as a collateral, thereby increasing the requirement of Valuation of Intangible Assets.
Intangible assets can be classified in majorly 5 categories i.e.
Marketing-related | Brand, Trademarks, Trade names, Internet domain names, Non-Compete Agreements |
Customer-related | Customer lists, Backlog, Customer contracts |
Artistic-related | Plays, books, films and music, etc. |
Contract-related | Licensing and royalty agreements, Service or supply contracts, Lease agreements, Permits, Broadcast rights, Servicing contracts, Employment contracts and Non-Compete agreements and Natural Resource rights |
Technology-based | Patents, Softwares, unpatented tech., Databases etc. |
The Valuation methodologies for each of the intangible asset vary from the other.
Glocal Consultantshas the expertise to help clients estimate and assign the value to their Intangible assets using suitable valuation approaches and methodologies which are globally recognized, after adequate analysis and following our proprietary processes.
We can help you in:
- Intangible Valuations
- Valuation for Business Combinations
- Purchase Price Allocation
- Joint-venture negotiations
- Licensing and Franchising Valuation
- Fundraising valuation
- Impairment testing
- Valuation for Transfer Pricing /Taxation
- Valuation for Internal Assessments