Companies require business valuations for corporate governance, regulatory compliance or for management review as a critical input in decision making
process. It may be planning a major acquisition, resolving a shareholder, or joint venture dispute, seeking to reduce the gap between intrinsic and market value.
1. Valuation of Intangible Assets & Intellectual Property:
A significant proportion of the difference between historical net worth of a
company and its market capitalization/ transaction value in M&A
transaction, is often attributed to the intangible assets. Investors,
lenders, analysts and other stakeholders are getting increasingly alert to
the importance and valuation of Intangible Assets.
Ind AS 38 also require impairment assessment of intangibles asset on an
annual basis and whenever there is an indication that the intangible
asset is impaired.
We have the expertise to help clients assess the value to their Intangible
assets using valuation approaches and methodologies which are globally
recognized.
2. Valuation of Start-Ups/ Portfolio Valuation for PEs/VCs:
Valuation of Start-Up often poses unique challenges due to their evolving
business model(s), limited/lack of comparables, evolving technologies
and market dynamics. We are providing valuation services to clients in
New Age Technology oriented companies.
3. Valuation for Regulatory Purpose:
Tax strategies are becoming increasingly complex and highly scrutinized
by regulatory authorities worldwide. Also, with fresh vigour in Companies
Act, 2013, companies require valuations for various compliance and
regulatory requirements.
We have specialization in areas of regulatory valuation, including,
valuations for compliance with the provisions of Companies Act, Income
Tax Act, Foreign Exchange Management Act (‘FEMA’), SEBI and other
regulations. Our team acts in consonance with the Companies’ Board and
Management to provide valuations services required under various laws
and regulations.
4. Valuation of Financial Securities, Instruments & Derivatives:
Financial Instruments Valuation includes determining the Fair Value of
equity instruments, debt instruments, derivatives (option and future
contracts) and convertible bonds / preference shares. Financial
Instruments may require valuation for commercial, financial reporting or
regulatory purposes.
5. Valuation of ESOP’s & Sweat Equity:
Equity linked compensation structures have led to emergence and
development of Employee Stock Ownership Plans under which stocks
options are granted to employees. Valuation of employee stock options
and sweat equity may be required for regulatory compliance, financial
reporting and tax purposes.
Valuation of equity awards and share-based payments depends on a
number of variables and often requires complex modeling to incorporate
unique terms and complex risks. We assists both public and private
organizations with stock compensation planning and financial reporting.
6. Valuation of Inventory / Stocks and Debtors / Receivables:
Currently, 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 Inventory / Stocks and Debtors /
Receivables so transferred.
Inventory valuation is the monetary amount associated with the goods in
the inventory. The valuation is based on the costs incurred to acquire the
inventory and get it ready for sale. While valuing inventory/stocks, due
allowance/adjustment should be made for any obsolete, unusable, or
unmarketable stocks held by the organization.
Accounts receivable: A receivable shall be classified as a “trade
receivable” if it is in respect of the amount due on account of goods sold
or services rendered in the normal course of business.
Debtors may constitute a significant proportion of the total assets of an
entity. While valuing debtors/receivables, appropriate
allowance/adjustment should be made for ageing, any bad debts and
debts which are doubtful of recovery.
7. Purchase price allocation for merger and acquisition:
Purchase price allocation (“PPA”) is an exercise where the acquirer
allocates the purchase price paid to the acquired assets and liabilities of
the target company. PPA is usually carried out for accounting and
financial reporting under Ind AS, IFRS and US GAAP, which requires
companies to report the Fair Value of assets and liabilities acquired in
their financial statements. PPA is also required for allocation of
consideration paid in a ‘Slump sale’/ ‘Slump exchange’ transaction. PPA
process allocates the purchase consideration paid for acquisition of an
entity/ business to the Fair Value of tangible and intangible assets
acquired and liabilities assumed. The difference between the purchase
consideration and the fair value of the tangible and intangible assets is
allocated to goodwill (subject to the impairment assessment).
PPA is a complex process and involve identification and valuation of
intangible assets. It requires an in-depth knowledge of the acquired
business and its key value drives as well as knowledge and experience in
the application of various valuation approach and methodologies.
8. Impairment Assessment of Intangible Assets:
Financial reporting usually require impairment assessment of Cash
generating units (‘CGU”), Tangible Assets and Intangible Assets at
periodical intervals or as and when circumstances indicates that there is
a diminution in the valuation of the asset.
Impairment Analysis provides guidance for the re-measurement of
intangible assets or goodwill pursuant to the financial reporting
requirement under Indian GAAP, Ind AS, IFRS or US GAAP.
9. Valuation under Insolvency & Bankruptcy code:
Valuation of assets is a key factor for an “informed decision making”
under the Insolvency and Bankruptcy Code (IBC). A key objective is to be
transparent and have credible determination of value of the assets to
facilitate comparison and informed decision making by the committee of
creditors.
Mr. Shilpang V Karia, Founder of SVK Finvalue Advisors Private Limited is
a Registered Valuer (“RV”) for the category Securities or Financial Assets
having registration number – IBBI/RV/06/2019/11160.
10. Determination of swap ratio for Merger & Demergers:
Strategic decisions are required to be taken by the board of directors for driving the next level of growth and development of the Company.Chasing strategic growth through merger and acquisitions, leveraged buyout, amalgamations, demerger or any other means requires an
independent opinion on the transaction that reassures the Company’s stakeholders on the fairness of the deal-making decisions taken by the
board of directors, and thus withstanding scrutiny and improving shareholder transparency.
