Valuation

Valuation is often one of the most important factor in a business or company share sale. If you price your business or company way too high, your business may not sell. If you place it too low, you are short changing yourself. Sometimes disputing parties could not agree on a price, for example in marital disputes or shareholder disputes, and that is where we come in to help provide independent and fair advice.

The uses of valuation can be split into 3 major categories – transaction based valuations, regulatory and administrative and disputes resolution.

How valuation can help sellers

We are often engaged to help sellers or business owners estimate the prices that they should buy or sell company shares or businesses as they often have little idea what the fair market value should be.

Key benefits of engaging our valuation service for sellers include:

  • Provide clear supporting reasons to back up the business value – this will help in negotiations with buyers and investors.
  • Identify strengths and value drivers in a business – enable sellers to better articulate their business’s value propositions to investors and buyers.
  • Identify areas of improvements – enable sellers to work on areas that can be improved and risks that can be mitigated before a transaction.
  • Brings focus to business strategies – identify business segments that the seller should focus on before and during a transaction in order to improve success rate.
  • Get good and fair returns for years of effort – valuation can uncover hidden value or ensure that sellers don’t underprice their business
  • Inline with market expectations – sellers will be flying blind without proper valuation, they can quote too high a price that will turn away buyers or quote too low¬† price that could shortchange themselves

Our sell-side valuation service seeks to deliver the above valuation benefits to business owners at an affordable price.

How valuation can help buyers

For buyers, they obviously don’t wish to over pay. Being too generous will harm future returns but being too conservative will probably mean the deal won’t go through. A professional valuer will be able to help an investor or buyer critically assess the fair value of an asset or business.

Key benefits of engaging our valuation service for buyers include:

  • Provide accurate intrinsic value of a business – knowing the intrinsic value of a business is often the key step in preventing overpaying for a business
  • Identify risk areas – a buyer can take steps to properly mitigate risks either by negotiating a lower price or take steps to mitigate such risks after purchase
  • Identify hidden growth areas – some growth areas might be overlooked by business owners and a buyer can use these “hidden gems” to justify a transaction
  • Price opportunities and synergies – more complex option valuation techniques can price opportunities that are not yet developed such as pending patents and undeveloped reserves.
  • Negotiation support– test the forecasts under various scenarios can help identify range of prices that can be supported.
  • Validate financial model – sometimes sellers might make mistakes in their financial models or valuation which we can help to identify.

Our buy-side valuation service seeks to deliver the above valuation benefits to investors and buyers at an affordable price.

Regulatory & Administrative

Financial reporting and tax reporting requirements often require independent valuations on certain transactions, assets or liabilities.

Buyers of companies and businesses often need to perform Purchase Price Allocation in order to meet financial reporting requirements.

Companies that has exotic financial instruments such as convertible preference shares, warrants and options often will need independent valuers to assist them in estimating the fair value of these financial instruments.

Tax authorities may also require certain assets to be valued by independent valuers as it may affect taxable amount.

Disputes

When there are disputes between more than one party regarding the right price to transact, it is often feasible to appoint an independent valuer to estimate the fair price that parties should transact. Sometimes each disputing party may appoint his own valuation expert to help justify the price that the dispute should be settled at.

Common disputes that we help include marital disputes, minority oppression disputes, joint venture disputes etc.

We have the experience in litigation and dispute negotiation support by providing professional and high quality valuation advice.

Wide Range of Valuation Services

The diagram below summarizes the uses of valuation in each category.

valuation-overview