Knowing what business is worth and what determines its value is prerequisite for intelligent decision making.
Corporate valuations form the basis of corporate finance activity including M& A, fund raising, sale of businesses and also to meet regulatory and accounting requirements. Though there are International valuation standards however not much guidance is available in India on the manner in which specific valuation methodologies are to be applied and different valuers take different assumptions leading to difference in value conclusion. In many cases the valuation also lacks uniformity and generally accepted global valuation practices. Thus, in the absence of standards of business valuation in India, the valuation is more of an art based on the professional experience and exposure of the valuer rather than science based on empirical studies and logics
Credible valuations are critical to the efficient working of the capital markets, businesses, government and all its stakeholders. With growing shareholder activism, importance of independent valuations is arising all over the world including India. Role of a valuer is to consider the facts of each case, understand purpose of valuation and applicable regulatory norms for such transaction. Validation of the inherent assumptions of a business model is critical in any business valuation engagement. Limitations and Assumptions should be properly explained in the valuation report.
In our country, Valuation in itself is evolving. New concepts of “Registered Valuer” in Companies Act, 2013 and “Fair Value” in Ind-AS are setting the tone for Indian Valuation Standards. With the valuation process opening up in India and more debate happening on valuations, complex valuation methods are also getting recognition as valuation is emerging as a discipline in India.
Corporate Professionals Capital Pvt. Ltd. is a SEBI Registered (Cat-I) Merchant Banker and Corporate Professionals Valuation Services Pvt. Ltd. is India’s 6th IBBI Registered Valuer entity. Our Team is based out of both Delhi and Mumbai with Professional Associates across India.
Our Valuation Team has about 60 years of consolidated transaction Advisory experience with about 15 years of focused Valuation practice. We have impeccable track record of executing more than 1500+ Valuations worth 40 bn $ for eminent clients in different context and across 30 industries with a successful track record of providing a broad range of M&A, Transaction Advisory, Corporate Valuation Advisors, Corporate Valuation Consulting in India. Our in-house research wing regularly identifies and prepares research articles on debated issues of business valuation, including how to apply the range of valuation techniques, including their appropriate application, advantages and disadvantages. We have created a niche in Valuation Services by executing more than 1500 Corporate Valuations (uncoding tangibles & intangibles) of clients of International Repute across different Context, Industries and Boundaries and delivering well-reasoned and defensive Valuation Reports.
Price is not the same as Value
Interestingly Price is an outcome of a Transaction but Value need not require a Transaction Price is highly influenced by the prevailing market conditions but Value should not change materially unless fundamentals of the business change
Value varies with Person, Purpose and Time
Type of Interest that can be valued may be Controlling Interest or Minority Interest
Standard and Premise of Valuation
To determine the Value of any business, the reasons for and circumstances surrounding the business valuation must be pre ascertained. These are formally known as the “Standard of Value” and “Premise of Value”.
Revenue Ruling (RR) 59-60 is one of the oldest guidance available on Valuation in the world but still most relevant for Tax Valuations specifically for valuing closely held common stock. It is the most widely referenced revenue ruling, also often referenced for Non Tax Valuations. While Valuing , it gives primary guidance on eight basic factors to consider-
Mr. Chander Sawhney
Partner & Head-Valuation and Biz Modeling
+91 11 40622252