BUSINESS / EQUITY VALUATION

Business valuation is primarily defined as a variety of tools which is used by investors to ascertain the
fair value of a company’s equity. Successful investment decision making is the most important aspect of
business valuation. End users include - Individual Investors, Institutional Investors & Hedge Funds

VALUATION OF STARTUP

Startup valuation is the process of evaluating the true worth of a company. Every startup requires
valuation as it is the most important aspect which helps in determining the total equity a business is
indebted to an investor in return for funds. On the other hand, investors benefit as it helps them get the
amount of return they are expected to receive on the their invested amount.

VALUATION OF IPO

IPO valuation depends on the company's future growth projections whereby the objective is to raise
capital for funding future growth prospects. IPO valuation is a process of evaluating the fair value of a
company’s equity.

VALUATION OF REIT

REIT stands for Real Estate Investment Trust which are dividend-paying stocks focusing on real estate.
Net Asset Value is a highly used REIT valuation method whereby instead of evaluating future cash flows
and discounting them to the present, the NAV method is a way to calculate REIT by determining the fair
market value of real estate assets.

VALUATION OF M&A

The acquirer and the target are the two parties involved in the valuation process of an M&A transaction.
The acquirer aims to buy the target at the lowermost price while on the other hand the target aims to
buy at the highest price. Hence, valuation is important in M&A from both buyer and seller perspective as
it helps in assessing the final transaction price. The primary motive of M&A is to develop synergies
whereby the value of the combined company is more than the two companies individually.

LEVERAGE BUY-OUT VALUATION

A leverage buyout is an acquisition of an underperforming company which is significantly debt-funded.

The investors aim to increase shareholder returns and repay debt from the company’s operational cash
flows. Leveraged buyout valuation is an analysis which is primarily used for valuation purposes.

In majority of the businesses, LBO is highly used for business growth. Through LBO, buyers can analyze
the maximum purchase price paid on the basis of leverage levels and associated returns.
 VALUATION OF ESOPS & SWEAT EQUITY

EMPLOYEE STOCK OPTION PLAN (ESOP)

ESOP is a plan by which a company provides stock options to the employees on performance basis.
Employees who have taken ESOPS holds the right and not an obligation to purchase the shares of the
company at a pre-decided price. ESOP’s help employees in performing better and enhance shareholders
value.

The primary objective of ESOP paying companies is focusing on employee retention who are high
performers thereby making them the stakeholders of the company. Few Advantages include -
productivity increases as ESOPs helps in recognizing strong employee loyalty & attracts high-performers
and employee retention.

VALUATION FOR TAX, CAPITAL GAIN AND TRANSFER PRICING

Tax Valuations - Tax strategies have become an important tool in corporate world for tax-related
matters and is highly complex thereby governed by regulatory authorities. Hence, tax laws and
regulations recommend that a valuation is required before implementation. Important tax valuation
services include – purchase price allocations, business & legal entity valuation, estate & gift tax
valuations, tax restructuring valuations, Section 409(a) valuations, cost segregation analyses, fair market
value interest expense allocation valuations and valuation of non-compete agreements

Capital Gain - Capital gain is an increase in asset value resulting from the price appreciation of the asset.
Capital gain occurs when the sale price of an asset is more than its purchase price. Capital gains are
applicable on capital assets including stocks, bonds, goodwill and real estate.

Transfer Pricing – Transfer pricing is defined as the price which one division in a company charges
another division for the goods/services rendered. Transfer pricing is between related enterprises such as
holding and subsidiary companies. The primary motive of transfer pricing is to bring-down the overall
tax burden on the company

VALUATION FOR FINANCIAL REPORTING, FAIRNESS OPINION, PURCHASE PRICE ALLOCATION (PPA)
FOR M&A

Financial Reporting Valuations – It is the responsibility of companies to present financial information

accurately to their shareholders and creditors. When companies are preparing financial statements,
they provide financial information which are in adherence with the accounting standards and states that
assets and liabilities should be measured at fair value. Services pertaining to financial reporting help
clients with mergers & acquisitions, taxation planning & compliance, financial reporting, bankruptcy,
litigation & dispute resolution and strategic planning.

Fairness Opinion – This opinion is based on thorough financial analysis including a comparison of the
target's value to the purchase price to analyze whether the transaction is fair to the company's
shareholders.
Purchase Price Allocation for M&A - Purchase Price Allocation is a major component of an M&A
transaction which allows distribution of the value of the purchase consideration among various tangible
and intangible assets acquired from the target following the M&A.

DETERMINATION OF SWAP RATIO UNDER MERGER AND DEMERGER

Swap ratio is the exchange rate between company’s shares which are in the process of undergoing an
M&A transaction. M&A transactions ideally are not necessary to be conducted with a cash purchase of
the target’s equity shares. Rather, the acquiring company has the right to decide to pay cash, convert
the target’s stock to its own or use a blend of cash and stock. In order to convert stock of one company
to another, both companies are required to agree on an exchange rate which is known as swap ratio.

VALUATION OF INVENTORY / STOCKS AND DEBENTURES / RECEIVABLES

Inventory valuation is followed by companies to evaluate the value of unsold inventory at the time they
are preparing their financial statements. This value help companies assess inventory turnover ratio
which would help in planning purchasing decisions.

In a situation when a debenture is redeemable, its present value can be calculated by estimating its
future cash flows & discounting the estimated future cash flows at a capitalization rate or discounting
rate.

LITIGATION AND DISPUTE SUPPORT

Litigation and dispute resolution services provide much needed assistance to businesses in complex
disputes. Whether the dispute involves lost profits, economic damages or business valuation, financial
litigation support helps in calculating the damages and analyze how the issue affects the business.

VALUATION OF BRANDS, GOODWILL, TRADEMARK, COPYRIGHT, PATENTS, OTHER INTANGIBLE ASSETS

& INTELLECTUAL PROPERTY

Valuation of intangible assets of a company is done by deducting book value from the company’s market
value. The primary objective of intangible assets valuation is to ascertain the quantifiable amount of
economic benefit.

Valuation of Intellectual Property – IP valuation is a procedure of assessing the value of IP assets which
include patents, trademarks, copyrights amongst others. Few reasons of using IP valuations are – IP
licensing deals, Joint Ventures, Litigation Support, Tax Planning and Compliance, Transfer Pricing,
Bankruptcy amongst others.
VALUATION FOR FINANCIAL REPORTING, FAIRNESS OPINION, PURCHASE PRICE ALLOCATION (PPA)
FOR (M&A)

Financial Reporting of Intangible Assets – Purchase of Intangible assets without any business
combinations are recorded at fair value. On the other hand, when a number of intangible assets are
bought as part of a group, the purchase price is assigned to each asset on the basis of its fair value.

Fairness Opinion – This opinion is based on thorough financial analysis to ascertain whether the
transaction involved is fair to the company's shareholders.

Purchase Price Allocation for M&A - Purchase Price Allocation is a major component of an M&A
transaction which allows distribution of the value of the purchase consideration among various tangible
and intangible assets acquired from the target following the M&A.

IMPAIRMENT STUDIES OF INTANGIBLE ASSETS

In business, impairment happens when an intangible asset is considered less valuable than it appears on
the balance sheet post amortization. When the fair value is less than the intangible asset's current value,
the asset is considered impaired. In such a case, the difference between fair value and current value is
considered as impairment charge.

VALUATION OF FINANCIAL SECURITIES, INSTRUMENTS & DERIVATIVES

Financial securities valuation is defined as evaluating the market value of equity / debt instruments and
derivatives issued by corporates and government agencies. Valuation services for a large number of
financial instruments and derivatives include – bond & liability valuation, futures & options, derivative
valuation amongst others. Financial Instruments are widely used for commercial, financial reporting, tax
and regulatory purposes.

VALUATION FOR M&A TRANSACTION UNDER INSOLVENCY & BANKRUPTCY CODE

Valuation of an M&A transaction under insolvency & bankruptcy code is to be held by a valuer entity
which has to be mandatorily registered with the IBBI (Insolvency and Bankruptcy Board of India) under
Companies (Registered Valuers and Valuation) Rules, 2017.

VALUATION OF LAND, BUILDING RESIDENTIAL / COMMERCIAL / INDUSTRIAL ESTATES

Valuation of building or property is the process of evaluating the present saleable cost of the building. A
property which is constructed on a freehold land has high valuation vis-à-vis property on the leasehold
land. Valuation of residential or commercial property is important for several reasons like - for buyers an
accurate valuation helps them to purchase a property at cost-effective market value and ensures that
they does not pay extra money for an asset.
VALUATION OF INFRASTRUCTURE ASSETS, EXPRESSWAYS / TOLL WAYS & SPECIALIZED ASSETS

Independent experts are involved in the valuation process of unlisted infrastructure assets. These
experts make use of discounted cashflow valuation methodology to arrive at the net present asset
value.

Special property valuation is the method of achieving the transaction property price. It includes
valuation of specialized assets like ships, windmills, factories, power plants amongst others.

VALUATION FOR CAPITAL GAIN TAX, STAMP DUTY, LITIGATION & DISPUTE

Capital Gain tax is calculated on the basis of the property’s market value at the time of selling the
property. Capital gain is evaluated on the basis of personal income and profit gained by the seller on
asset sale. Valuation for capital gain is extremely crucial for tax liability assessment.

Stamp duty price is approximately in the range of 5-7% of the property’s market value while registration
charges are around 1% of the market value of the property.

Valuation of litigation and disputes are done for different situations which include – merger /
acquisitions dispute, buy / sell agreement disputes, shareholder disputes, breach of contract related
matters, bankruptcy litigation amongst others.

MINES, MINERAL ADVISORY AND VALUATION

Valuation of a mining asset is done by building a Discounted Cash Flow (DCF) model which is done by
considering a mining plan developed in a feasibility assessment report. Few valuation methods used for
mineral advisory valuation include – Price to Net Asset Value, Price to Cash Flow and Total Acquisition
Cost.

VALUATION OF INDUSTRIAL ASSETS AND PLANT & MACHINERY

Plant & Machinery are majorly used by large scale business which are heavily dependent on assets used
in manufacturing, production or lease to third party and are used for a longer duration which is more
than a year. Valuation of Plant, Machinery and Industrial Assets are required for a variety of reasons
which include – strategic sale, initial public offerings, fund raising from NBFC’s, secured lending, mergers
and acquisitions, financial reporting amongst others.