The document discusses key concepts in business valuation including: - Valuation is the process of determining the value of a business or assets by applying valuation standards and approaches. - Financial statements, valuation bases, approaches, and methods are defined according to the Companies Act and valuation standards. - The valuation process involves defining the valuation task, analyzing the asset, considering approaches and methods, and documenting the conclusion in a valuation report.

1. Business Valuation
2.Valuation Overview
CA Dr Prithvi Ranjan Parhi
Chartered Accountant and Registered Valuer
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“A firm can have value only if it ultimately delivers
earnings.”
― Aswath Damodaran,
- The Little Book of Valuation: How to Value a Company, Pick a Stock and Profit

3. Financial Statement
Sec 2(40), of Companies Act,2013
Financial statement” in relation to a company, includes—
• (i) a balance sheet as at the end of the financial year;
• (ii) a profit and loss account, or in the case of a company carrying on any activity not for
profit, an income and expenditure account for the financial year;
• (iii) cash flow statement for the financial year;
• (iv) a statement of changes in equity, if applicable; and
• (v) any explanatory note annexed to, or forming part of, any document referred to in
sub-clause (i) to sub-clause (iv):
• Provided that the financial statement, with respect to One Person Company, small
company and dormant company, may not include the cash flow statement;
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4. Valuation
•A “valuation” refers to the act or process of
determining an estimate of value of an asset or
liability by applying IVS.
-Para 20.14, Glossary, IVS
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6. Value
• The word “value” refers to the judgement of the valuer of the
estimated amount consistent with one of the bases of value set
out in IVS 104 Bases of Value.
• -Para 20.16, Glossary, IVS
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7. Value:
• A value is an estimate of the value of a business or business ownership
interests, arrived at by applying the valuation procedures appropriate for a
valuation engagement and using professional judgment as to the value or
range of values based on those procedures.
• -Para 6.43 ICAI Valuation Standard 101
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8. Fair value:
• Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants
at the valuation date.
-Para 6.13 ICAI Valuation Standard 101
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9. Going concern value:
• It refers to the value of a business enterprise that is expected to
continue to operate in the future.
• -Para 6.15 ICAI Valuation Standard 101
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10. Participant specific value:
• Participant specific value is the estimated value of an
asset or liability considering specific advantages or
disadvantages of either of the owner or identified
acquirer or identified participants.
-Para 6.28 ICAI Valuation Standard 101
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11. Orderly transaction:
• Orderly transaction is a transaction that assumes exposure to the market for
a period before the valuation date to allow for marketing activities that are
usual and customary for transactions involving such assets or liabilities and
it is not a forced transaction.
• The length of exposure time will vary according to the type of asset and
market conditions.
• -Para 6.27 ICAI Valuation Standard 101
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12. Business Valuation:
• It is the act or process of determining the value of a business
enterprise or ownership interest therein.
-Para 6.1 ICAI Valuation Standard 101
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13. Valuation base:
• Valuation base means the indication of the type of value being used in an
assignment.
• -Para 6.1 ICAI Valuation Standard 101
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14. Valuer
• A “valuer” is an individual, group of individuals or a firm who possesses the
necessary qualifications, ability and experience to execute a valuation in an
objective, unbiased and competent manner.
• In some jurisdictions, licensing is required before one can act as a valuer.
• - Glossary, IVS 20.17.
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15. Valuer
• 29. The term valuer as used in this Framework means the registered
valuer registered with the Registering Authority under Section 247 of
the Companies Act 2013 and Rules made thereunder for carrying out
valuation of assets belonging to a class or classes of assets.
• 30. The term valuer also includes a valuer undertaking valuation
engagement under other Statutes like Income Tax, SEBI, FEMA, RBI etc.
-Para 29 & 30 Framework of ICAI Valuation Standard
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16. Reporting
• Where the report is the result of an assignment involving the valuation of an asset
or assets, the report must convey the following, at a minimum:
i. the scope of the work performed, including the elements noted in para 20.3 of IVS 101
Scope of Work, to the extent that each is applicable to the assignment,
ii. the intended use,
iii. the approach or approaches adopted,
iv. the method or methods applied,
v. the key inputs used,
vi. the assumptions made,
vii. the conclusion(s) of value and principal reasons for any conclusions reached, and
viii.the date of the report (which may differ from the valuation date).
-Para 30.1 :IVS 103 Reporting
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17. Bases of Value
• 10.1. Bases of value (sometimes called standards of value) describe the
fundamental premises on which the reported values will be based.
• It is critical that the basis (or bases) of value be appropriate to the terms and
purpose of the valuation assignment, as a basis of value may influence or dictate a
valuer’s selection of methods, inputs and assumptions, and the ultimate opinion of
value.
• 10.2. A valuer may be required to use bases of value that are defined by statute,
regulation, private contract or other document.
• Such bases have to be interpreted and applied accordingly.
-IVS 104 Bases of Value
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18. Bases of value:
(a) IVS-defined bases of value:
1. Market Value
2. Market Rent
3. Equitable Value
4. Investment Value/Worth
5. Synergistic Value and
6. Liquidation Value
neralStandards – IVS 104 Bases of Value
(b) Other bases of value (non-exhaustive list):
1. Fair Value (International Financial Reporting Standards)
2. Fair Market Value (Organisation for Economic Co-operation and
Development)
3. Fair Market Value (United States Internal Revenue Service) (, and
4. Fair Value (Legal/Statutory) (section 120):
-Para 20.1 IVS 104 Bases of Value
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19. Define the valuation base, premise of the value and valuation date
Analyse the asset to be valued and collect the necessary information
Identify the adjustments to the financial and non-financial informationfor the
valuation
Consider and apply appropriate valuation approaches and methods
Arrive at a value or a range of values
Identify the subsequent events, if any
Valuation report and documentation
Valuation Process – Key Steps
Steps of Valuation as prescribed by ICAI Valuation Standard

20. Valuation Approaches
Market Approach
Market Price Method
Comparable Companies
Multiple Method
Comparable Transaction
Multiple Method
Income Approach
Discount Cash Flow
Method
Earning Capitalization
Method
Dividend Discount
Model
Intangible Asset
Valuation -
oRelief from Royalty
Method
•Multi Period Excess
Earning Method
•With or Without Method
Option Pricing
Models
Cost Approach
Replacement Cost
Method
Reproduction Cost
Method
Valuation Process: Valuation Approaches
(ICAI Valuation Standards

21. Extracts of a Valuation Report
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22. Extracts of a Valuation Report
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23. Extracts of a Valuation Report
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24. Extracts of a Valuation Report
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25. Extracts of a Valuation Report
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26. Extracts of a Valuation Report
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27. Extracts of a Valuation Report
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28. Extracts of a Valuation Report
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29. Extracts of a Valuation Report
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30. Extracts of a Valuation Report
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31. Thank You.
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