Share Valuation Report based on DCF
Certificate from a Category I Merchant Banker
Share Valuation Report based on Book Value Formula
Presentation in PDF format
Certification from Registered value
in cost, most economical
completion of assignment
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Professionally calculated and tallied and verified
From registered Valuers and Merchant Bankers
What is Share Valuation Report
Valuation of Share is an exercise to determine the Fair Market Value of Unlisted Shares. While it is easy to gauge the Valuation of Listed shares (Price quoted in the market), for Unlisted shares - it often becomes very difficult to fairly understand the Value per share. Valuation exercise is thus done to fairly calculate and understand the Value per share of an Unlisted Company (Private & Public). Requires deeper understanding of numbers, calculation and financial projections. Share Valuation report is often required by different departments of Government (Ministry of Corporate Affairs, Income Tax Department) for specific purposes. Government has for this purpose also identified people / entities with specific qualifications / accreditations to be able to certify these reports. Thus the valuation report is mainly required for the following purposes:
Merger and Amalgamation
Tax returns and/or financial statements (income statements and balance sheets)
Payroll, fixed asset/depreciation, inventory reports
Payables and Receivables aging reports
Corporate records such as by-laws, articles of incorporation/formation, minutes of board meetings, etc.
Loan documents for Key Loans
* (All documents in Pdf scanned. Image file in jpeg format)
* (All documents to be Self Attested and signed on each page)
Valuation exercise is thus done to fairly calculate and understand the Value per share of an Unlisted Company (Private & Public), the report of such Valuation is called Share Valuation Report
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Understanding why the Business is being Valued
Gather the information: The financial information is paramount to most business valuations, whatever the end purpose3-5 years of income statements and balance sheets is ideal. If the business property is leased, the lease agreement is needed as well as an
Recast the financials: To determine the actual profitability of such businesses, the financial statements need to be adjusted. An add-back schedule will allow a prospective purchaser and their financial adviser the ability to recognise the actual operatin
Choose the business valuation approach: Most known business valuation methods fall under one or more of these fundamental approaches: Asset approach, Income approach, Market approach
Apply the business valuation approach: Once the data has been assembled and the business valuation approach chosen, the result should produce an accurate, concise and easily justifiable results.
The business value conclusion: The resulting report should explain the processes and justifications that have been applied to the valuation, culminating in a valuation report that is applicable and pertinent to the reasons for the valuation.
Important elements of Share valuation report, that one should consider
Entity should identify and appoint the right professional for the job. Appointing someone with no experience or understanding will lead to miscalculation and issues with with government agencies and authorities.
If valuation is as per Discounted Cash Flow (DCF) Method – Valuation is to be carried out by a Registered Valuer (RV) who is also a SEBI Registered Category I Merchant Banker
If valuation is as per Net asset Value (NAV) Method or any other method – Valuation can be carried out by a Registered Value (RV)
The provisions of section 56(2) (x) read with Rule 11UA (1) (c) (b) has to be kept in mind from the recipient perspective.
Benefits
Methodology
If valuation is as per Discounted Cash Flow (DCF) Method – Valuation is to be carried out by a Registered Valuer (RV) who is also a SEBI Registered Category I Merchant Banker
If valuation is as per Net asset Value (NAV) Method or any other method – Valuation can be carried out by a RV
The provisions of section 56(2)(x) read with Rule 11UA(1)(c)(b) has to be kept in mind from recipient perspective.
Ideal steps for tax neutral allotment in the hands of issuer and subscriber:
Step 1- Value as per section 56(2)(x) read with Rule 11UA(1)(c)(b) i.e. NAV method considering market value of jewellery, archeological collection, stamp duty value of land and building etc.
Step 2- If one is adopting DCF method, ensure that value as per Step 1 is considered
Step 3- If one is adopting NAV method, then adopt price as per step 1 and state that it falls within other method to the satisfaction of Assessing Officer (AO)
