This document provides an overview of business valuation. It discusses key drivers of valuation like purpose and industry factors. It also covers valuation concepts like fair market value and intrinsic value. Common valuation methods are described such as income, asset, and market approaches. The document also discusses valuation of shares and intangibles like goodwill.
Corporate Valuations “Techniques & Application”: A compilation of research oriented valuation articles.
Contents: Business valuation, Relative valuation, Sum of the parts valuation and value creation, ESOP valuation, Discounted Cash Flow Valuation, Enterprise Valuation etc.
Business Valuation PowerPoint Presentation SlidesSlideTeam
Presenting this set of slides with name - Business Valuation PowerPoint Presentation Slides. The stages in this process are Business Valuation, Financial Analysis, Economic Valuation.
Introduction to Business Valuation, Fair Market Value, reasons and elements of business valuation, methodologies of business valuation, case study on net asset value.
Corporate Valuations “Techniques & Application”: A compilation of research oriented valuation articles.
Contents: Business valuation, Relative valuation, Sum of the parts valuation and value creation, ESOP valuation, Discounted Cash Flow Valuation, Enterprise Valuation etc.
Business Valuation PowerPoint Presentation SlidesSlideTeam
Presenting this set of slides with name - Business Valuation PowerPoint Presentation Slides. The stages in this process are Business Valuation, Financial Analysis, Economic Valuation.
Introduction to Business Valuation, Fair Market Value, reasons and elements of business valuation, methodologies of business valuation, case study on net asset value.
Company Valuation PowerPoint Presentation Slides SlideTeam
Get ready-made Company Valuation PowerPoint Presentation Slides to analyse all the profit and net value your business has made. Conduct a thorough evaluation of a company’s management, capital structure, future earning prospects, and more with the help of professionally designed company valuation PPT presentation templates. Determine the current worth of a business and assess all aspects of a business. This deck comprises of several company valuation PowerPoint templates like valuation methodology, valuation steps, company valuation methodologies, determining free cash flow, valuation results, business due-diligence process, strategic due-diligence methodology, and more. Incorporate business valuation PowerPoint slideshow to estimate the selling price of the business. Use business valuation methods PowerPoint techniques for valuing a business asset such as cost approach, cost to build, replacement cost, market approach, discounted cash flow, forecast future cash flow, etc. Grab access to the company valuation complete PowerPoint deck for a business analysis. Employ a few jocular expressions with our Company Valuation Powerpoint Presentation Slides. It helps insert a bit of humor.
Many investors mistakenly base the success of their portfolios on returns alone. Few consider the risk that they took to achieve those returns. Since the 1960s, investors have known how to quantify and measure risk with the variability of returns, but no single measure actually looked at both risk and return together. Today, we have three sets of performance measurement tools to assist us with our portfolio evaluations. The Treynor, Sharpe and Jensen ratios combine risk and return performance into a single value, but each is slightly different. Which one is best for you? Why should you care? Let's find out.
Portfolio performance measures should be a key aspect of the investment decision process. These tools provide the necessary information for investors to assess how effectively their money has been invested (or may be invested). Remember, portfolio returns are only part of the story. Without evaluating risk-adjusted returns, an investor cannot possibly see the whole investment picture, which may inadvertently lead to clouded investment decisions.
For full text article go to : https://www.educorporatebridge.com/financial-modeling/financial-modeling-technique/ This Financial Modeling Technique will help you to understand some important techniques like color coding, circular reference, compilation of historical data, things needs to be considered before making an assumption etc in order to make a financial model easy to understand.
capital structure
,
goals and significance of capital structure
,
target capital structure
,
does capital structure matter
,
modigliani and miller theory
Company Valuation PowerPoint Presentation Slides SlideTeam
Get ready-made Company Valuation PowerPoint Presentation Slides to analyse all the profit and net value your business has made. Conduct a thorough evaluation of a company’s management, capital structure, future earning prospects, and more with the help of professionally designed company valuation PPT presentation templates. Determine the current worth of a business and assess all aspects of a business. This deck comprises of several company valuation PowerPoint templates like valuation methodology, valuation steps, company valuation methodologies, determining free cash flow, valuation results, business due-diligence process, strategic due-diligence methodology, and more. Incorporate business valuation PowerPoint slideshow to estimate the selling price of the business. Use business valuation methods PowerPoint techniques for valuing a business asset such as cost approach, cost to build, replacement cost, market approach, discounted cash flow, forecast future cash flow, etc. Grab access to the company valuation complete PowerPoint deck for a business analysis. Employ a few jocular expressions with our Company Valuation Powerpoint Presentation Slides. It helps insert a bit of humor.
Many investors mistakenly base the success of their portfolios on returns alone. Few consider the risk that they took to achieve those returns. Since the 1960s, investors have known how to quantify and measure risk with the variability of returns, but no single measure actually looked at both risk and return together. Today, we have three sets of performance measurement tools to assist us with our portfolio evaluations. The Treynor, Sharpe and Jensen ratios combine risk and return performance into a single value, but each is slightly different. Which one is best for you? Why should you care? Let's find out.
Portfolio performance measures should be a key aspect of the investment decision process. These tools provide the necessary information for investors to assess how effectively their money has been invested (or may be invested). Remember, portfolio returns are only part of the story. Without evaluating risk-adjusted returns, an investor cannot possibly see the whole investment picture, which may inadvertently lead to clouded investment decisions.
For full text article go to : https://www.educorporatebridge.com/financial-modeling/financial-modeling-technique/ This Financial Modeling Technique will help you to understand some important techniques like color coding, circular reference, compilation of historical data, things needs to be considered before making an assumption etc in order to make a financial model easy to understand.
capital structure
,
goals and significance of capital structure
,
target capital structure
,
does capital structure matter
,
modigliani and miller theory
The basics of what business valuation is and isn't
The different approaches to valuing a business
When a business valuation is necessary
When it's a good idea
The reasons valuations can differ
How a valuation can provide you critical information to make your business stronger and more profitable.
DCF Valuation : Business Valuation Article by Corporate Valuation TeamCorporate Professionals
Discounted Cash Flow (DCF) Method of Valuation expresses the present value of the business attributable to its stakeholders as a function of its future cash earnings capacity.
Chander Sawhney (FCA, CS, Certified Valuer (ICAI), Vice President, Corporate Professionals, SEBI REGISTERED (CAT -I) MERCHANT BANKER in
“CKF Master class on Recent Developments in Foreign Exchange Management Law” – 17 th Aug,2012
Investments are a great way to allow your money to earn for you. However, to yield the best results, you cannot remain completely uninvolved. These can only be achieved with constant monitoring and fine-tuning of investments. For those who have extensive financial investments, the proper management of these investments could mean the difference between success and failure in the markets. While mutual funds are considered safer than traditional investments owing to their diversity, it’s very important to constantly monitor them with the help. In fact, there are professional financial planners for this purpose. This article will explain the benefits of calculating the NAV of your mutual fund investments with a financial planner.
REQUIREMNETS FOR GETTING LICENSE OF VALUER
ROLE OF VALUER WITH VARIOUS AGENCIES FOR LOANS,
MORTGAGE,
PROPERTY DISPUTES IN COURT OF LAW ETC.
MORE WORKS OF VALUER AND VARIOUS
FORMS TO BE FILLED BY VALUER IN HIS
WORK.
FORMATS OF VALUATION REPORT FILLED BY VALUER.
TERMS OF ENGAGEMENT FOR EMPANELMENT OF VALUERS.
IBA SUB-COMMITTEE ON
MORTGAGE AND VALUATION OF PROPERTY
The recent economic growth coupled with uncertainties has resulted in the stakeholder's curiosity and interest in Valuations of their respective investee Companies and also the estimated Valuations of the Targets available for Sale which has led to a greater demand for Business Valuation services.
Since as of now there are no Regulated standards for Valuation in India, numerous conceptual controversies still remain, even among the most prominent practitioners. With a view to give an overview of the Valuation concepts in general and the practical issues in particular, www.corporatevaluations.in, an online venture of Corporate Professionals Capital, SEBI Registered Merchant Banker has prepared this report on "Insight of Valuation". Hope you find it useful. Suggestions for improvement are invited @ info@corporatevaluations.in
Mr. Chander Sawhney, Partner & Head – Valuation & Deals, Corporate Professionals shared his thoughts as a guest Speaker on Relative Valuation - Techniques & Application at a Business Valuation Masterclass organised by VC Circle on 31st August, 2016.
Relative Valuation in which value of an asset or liability is done by comparing it to its Peers is pervasive and preferred for ascertaining Fair Value at a point of time as it reflects the market positioning of the Industry and Peers at that time. While Discounted Cash Flow (DCF) method is applied for arriving at Fundamental Valuation, most M&A transaction are based on Relative Valuation multiples (mostly Earnings based). The valuation ratio typically expresses the valuation as a function of a measure of Key Financial Metrics like PE, EV/EBITDA, EV/Sales or Book Value Multiple.
But before using a multiple, one should know the fundamentals determining the multiple and how changes impact it. Sanity check through use of fundamental valuation method like DCF is strongly recommended.
About Corporate Professionals Valuation Practice
Corporate Professionals Capital Pvt. Ltd. is a SEBI Registered (Cat-1) Merchant Banker and has a successful track record of providing a broad range of M&A and Transaction Advisory Services. Our Dedicated Team has more than 10 years of rich Valuation experience and we have executed more than 500 Corporate Valuations for clients of International Repute across different Context, Industries and Boundaries.
To know more about Our Valuation offerings and how we can help you, please visit us at www.corporatevaluations.in or download our Valuation profile @ http://www.corporatevaluations.in/VALUATION_PROFILE.pdf
Valuation in Indian Regulatory Environment with focus on Tricky Issues: the presentation given by Mr. Chander Sawhney, Vice President (chander@indiacp.com) of Corporate Professionals at the CKF Masterclass "Corporate Valuations- Techniques and Applications"...
Designed for understanding of equity valuations for tech guys in various start-ups, this is a quick and simple re-cap on equity valuations. A small handbook for everybody's use in simple, lucid and day-to-day language.
Presentation for ICSI Certificate Course of Valuation (Oct 2013) given by Mr. Chander Sawhney, Vice President, Corporate Professionals:
This presentation elaborately deals with Theoretical, Procedural and Regulatory aspects of Business Valuation in India.
Mr. Chander Sawhney, Partner & Head – Valuation & Deals, Corporate Professionals shared his thoughts as a guest Speaker on Valuation Principles & Techniques in Ind AS at a seminar organised by Gurgaon Branch of ICAI on 3rd September, 2016.
IndAS113 prescribes Fair Valuation definition, Techniques, Application and its Hierarchy. About 75% of the Balance Sheet Size is expected to change due to Fair Value Accounting (#IndAS109 #Financial Instruments, #IndAS102 #Share based payments, #IndAS16 Property Plant Equipments (PPE), #IndAS103 #Business combination etc. shall be impacted using #FairValue. Time to get ready, Plan Prepare and Align with the new requirements...
About Corporate Professionals Valuation Practice
Corporate Professionals Capital Pvt. Ltd. is a SEBI Registered (Cat-1) Merchant Banker and has a successful track record of providing a broad range of M&A and Transaction Advisory Services. Our Dedicated Team has more than 10 years of rich Valuation experience and we have executed more than 500 Corporate Valuations for clients of International Repute across different Context, Industries and Boundaries.
To know more about Our Valuation offerings and how we can help you, please visit us at www.corporatevaluations.in or download our Valuation profile @ http://www.corporatevaluations.in/VALUATION_PROFILE.pdf
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Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
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A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
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Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
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Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
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Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
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6. Introduction
Key Drivers of Valuation
Concepts of Value
Golden Rules of Valuation
Valuation Methods
Valuation of Shares
Goodwill / Brand Valuation
Contents
7. Introduction
Liberalization of economy, emphasis on core competence,
and relaxation of tax laws led to spurt of mergers, takeover,
acquisitions, de-mergers etc.
Aligning business activities in line with the prime objective
of creating & maximizing shareholders’ wealth, has
propelled large organizations into such strategic decisions.
In all these strategic decisions, one common thing that
assumes very critical proposition is “Business Valuations”.
‘Value’ means economic value, an amount expressed in
monetary terms, to be paid in exchange for an asset or right
to receive future benefits from use of the asset.
8. Introduction
Business
Valuation
• Total economic environment
• Potential use of the asset
• Timing of the value estimate
• Location of the asset
• Relative scarcity
• Availability of substitutes
• Extent of ownership involved
• Liquidity of the asset
• Physical condition of asset
Valuation dynamics
Value is not a static or homogenous concept
Value is different from
price or cost.
Price is the amount
spent to acquire an
asset, while Value is
what lies in the eyes of
the payer
9. Key Drivers of Valuation
Purpose of Valuation
• Buyer vs. Seller
• Acquisition vs. Investment
• Legal vs. Commercial
Industry and Sector
• Economy – Boom vs. Gloom
• Emerging vs. Dying Sector
• Manufacturing vs. Service
• Structured vs. Traditional
Macro factors
• Economic scenario
• Investment patterns in sector
• Government role
• Fin. Inst, Banks role
Micro factors
• Nature of product / service
• Business life cycles
• Seasonal nature
• Growing vs. Maturity
Regulations
• SEBI Takeover Regulations
• Banking mergers – RBI role
• Stock Exchange guidelines
• Companies Act
10. Concepts of Value
Fair Market Value – the amount (arms’ length price) at which an
asset would exchange between a willing seller and a willing buyer
(having reasonable knowledge).
Investment Value – the value of future benefits of ownership of an
asset to a particular buyer. Similar to Opportunity Cost.
Book Value – it means the value of a business, as reflected in the
audited financial statements of an enterprise.
Intrinsic Value – it is the total value of business after considering all
hidden and latent facts. Also defined as the present value of future
earnings stream discounted at the current market rate of return.
Going Concern Value – the value under the assumption that the
business will never die. Value is based on future maintainable
income as a going concern, capitalized by a suitable rate of return.
11. Concepts of Value
Replacement Value – replacement value is the cost of acquiring a
new asset of equal utility.
Goodwill / Brand Value – the value of intangible assets. Difference
between price paid for acquiring a business and the fair market
value of all assets acquired, net of liabilities.
Liquidation Value – it is the net amount that can be realized if a
business is terminated, its assets sold and liabilities satisfied.
Benchmark Value – based on comparative company valuation,
used for justifying valuation of companies via several adjustments.
Salvage Value – the amount realisable upon sale or other
disposition of an asset after it is no longer useful to the current
owner and is to be taken out of service. Different from scrap value,
where the asset is not useful for anyone for any purpose.
12. Golden Rules of Valuation
Valuation is an art, more than science
Valuation is more of subjective nature than objective
Valuation depends upon perceptions and skills of valuer
Valuation has a reference to time, even a single person
can have different values at different times
Price is paid for the deal, Value is in the eyes of the payer
Valuation is an critical tool for strategic decision making
Valuation is an application of theory and practice
13. Business Valuation Methods
Historical Cost
Current Cost
Economic Valuation
Asset Valuation
Market Valuation
14. Business Valuation Methods
Historical Cost Valuation – Also known as the Book Value
Method. All assets are taken at their respective historical
costs. Value of goodwill is ascertained and added to such
historical cost of assets.
Current Cost Valuation – Current cost of assets are taken
for valuation purposes, instead of historical costs.
• Tangible assets – current replacement price is taken
• Investment – valued at current market prices, unquoted
investments are taken at cost, unless MP determined
• Inventory – current market prices
• Debtors – net collection / realizable amount
• Intangibles – current acquisition prices (Patents, TM, CP)
15. Business Valuation Methods
Economic Valuation (Income based) – Fundamental logic
behind the concept is that values of business are determined
by its profitability (present and future) and cash generation
ability. There are three techniques:
Capitalization method – past profits (3-4 yrs) are capitalized at
a proper rate of return, as applicable to the company and the
industry. Adjustments are made for extraordinary items,
abnormal losses, taxation, appropriate weights to profits etc.
Profit Earning Capacity Value – similar to capitalization
method, except that future maintainable profits are considered
for capitalization.
Discounted Cash Flow – value of business is the present value
of all future cash flows. Better method, since it considers time
value of money. WACC be used as the discount factor. Future
cash flows calculation based on taxes, depreciation etc.
16. Business Valuation Methods
Asset based Valuation – this method is used in combination
with profitability and market value methods.
• While valuing assets under this approach, total assets are
divided into operating and non-operating assets.
• Non-operating assets are valued at realizable value, while
operating assets are valued at their book values.
Market Valuation – applicable for listed companies, where
share price is determined by market forces. Average price is
selected for valuation purposes
Comparative companies – certain parameters of comparative
companies are used for valuation. This method is more used
for negotiation, rather than valuation.
17. Valuation of Shares
Computation of the share value of a firm, using various
techniques. It involves arriving at the proper share value,
i.e. value which ‘ought to be’.
Considerations governing share valuation are intricate,
varied and numerous. They are quantifiable as well as
non-quantifiable, objective as well as subjective.
Valuer’s approach is influenced by purpose of valuation.
E.g. a valuer may use liberal ways in compensation cases,
while a strict view for taxation. (basic principles being same)
Valuation requires judicious assessment of the interests,
advantages, expectations, hazards of parties involved
18. Valuation of Shares – Purpose
Purchase of a block of shares, which may or may not give
the holder – a controlling stake in the company
Formulation of scheme of amalgamation, absorption,
merger and acquisition etc.
Acquisition of interest of dissenting shareholders under a
scheme of reconstruction
Compensating shareholders by the Govt. under scheme
of nationalization
Advancing a loan on the security of shares
Assessment under Wealth Tax Act
Conversion purposes (Deb., Pref. into equity shares)
19. Valuation of Shares
In case of shares quoted on recognized stock exchanges,
these prices are normally taken as the basis for valuation.
However, stock exchange quotations are not acceptable –
o Stock exchange prices are driven by demand-supply cycles
o Prices are more sentiment based, rather than fact based
e.g. Tata Motors price fell on acquisition of Jaguar, Rover
o Many factors other than company performance affect the
prices such as inflation, crude oil rate, political turmoil etc.
o Reign of speculation, intelligence, guess-work, fear etc.
Two factors stand-out to be basically important for share
valuation viz. assets employed and earning capacity. For a
going concern, earning power plays a major role, while
assets are considered only to indicate safety margin.
20. Share Valuation Methods
Net Assets Basis
# Net assets available to Equity share holders
Number of equity shares
# Tangible fixed assets (plant, bldg. etc.) and intangibles
(patents, copyrights etc) should be taken at their current
market costs. Separate valuation for goodwill is necessary.
# Investment at market prices / book value (availability basis)
# Stock of FG @ market price, but RM, WIP, stores may be
taken at cost. (using a conservative approach)
# Receivables be taken based on quality, with provisions.
# Fictitious assets, P&L debit balance, preliminary expenses
should be excluded.
21. Share Valuation Methods
Net Assets Basis
# All short-term and long-term liabilities should be deducted
from total assets. (incl. accrued interest and expenses)
# Preference capital, including dividend arrears be deducted.
# If ex-dividend equity share value is reqd., proposed equity
dividend should also be deducted.
# Adequate provisions for taxation and liabilities not provided
in the books of accounts.
22. Share Valuation Methods
Yield Basis
∂ Yield based valuation is earnings and rate of return centric.
∂ If a block of shares (controlling interest) is to be taken, rate
of earnings should be the basis.
∂ For a small block of shares, rate of dividend is the basis.
∂ Steps in valuation include determination of the future
maintainable profits and establishing desired rate of return.
Suitable adjustments be made in calculation of profits such
as abnormal items, taxation, depreciation, govt. policy etc.
∂ Capitalize the earnings by the rate of return to arrive at the
total value. Divide the total value with the number of shares
to get the value per share.
23. Valuation of Goodwill / Brand
Goodwill is an intangible asset and contributes to
the profit earning capacity of a business.
Goodwill is the difference between the value of a
business as a whole and the aggregate of the fair
values of its separable net assets. (UK A/c Std.)
Peculiarities of goodwill –
No direct / predictable relation with any costs incurred
Distinct factors adding brand value cannot be valued
Value of goodwill fluctuates widely, over short periods
Assessment of brand / goodwill is highly subjective
Types of goodwill – ‘Dog’, ‘Cat’ and ‘Rat’
24. Goodwill / Brand Creation
גּ Steady, growing profitability
גּ Minimal risk exposure
גּ Superior management
גּ High quality products
גּ Exceptional sales section
גּ Secret / patent processes
גּ Effective advertising
גּ Outstanding credit ratings
גּ Cost savings
גּ Technology advantage
גּ Strong capital base
גּ Better liquidity position
גּ Good public image
גּ Strategic location
גּ Favourable govt. policies
גּ Good labour relations
גּ Social commitments
גּ Weak competitors
גּ Market dominance
גּ Economies of scale
25. Goodwill / Brand Valuation
Simple Profit Method – In this method, goodwill is valued
on the basis of certain number of years purchase of average
profits of the past few years.
Average profits = Capital employed * normal rate of return
Goodwill = Average profits * no. of years purchase
Super Profit Method – Excess of future maintainable profit
over normally expected profit is known as super profits.
Under this method, goodwill is taken as the number of years
purchase of super profits expected to be maintained.
Super Profit = future profits – (capital employ * normal rate)
Goodwill = Super profits * no. of years maintained
26. Goodwill / Brand Valuation
Capitalization Method – Future maintainable profits are
capitalized, by using a normal rate of return to arrive at the
normal capital employed. Goodwill is the excess of normal
capital employed over actual capital employed.
Normal Capital Employed = Future maintainable profit
Normal rate of return
Goodwill = Normal capital employ (-) Actual Capital employ