Business

Valuation
ACCE 412 (4956)
GROUP 1
 Table of
01 What is Value?
Contents
Factors that affect
02
Valuation

Why is Valuation
03
Important?

04 Types of Valuation

05 Valuer and Value Report

 WHAT IS

VALUE?
 Valuation
0
1 Value 06
0 Current Rate
02 Wort 7 Market Price
03 hEstimate 08 Fair Value
04 Assessment 09
1 Supply and
05 Cost 0 Demand
Etc.
 Valuation

In general, is a process of
estimating something’s worth

Gold House and Lot Charcoal

 Valuation

01 02
Objective Subjective
Component Component
The real or intrinsic Linked to the
value of an object. perception of valuer
toward the object to be
valued
Business valuation is the act of
estimating or setting the
potential value of a business by
considering both internal and
external variables.
 FACTORS
VALUATI
AFFECTING

ON
Factors that affect Valuation

Bias

Uncertainty

Complexity
BIAS
 Sources of Bias

Compan Informati Another

y chosen on valuer or
to value collected analyst’s
Market’s Institution view
Reward
estimate al and
of the factors punishm
 How to Reduce Bias?

Reduce institutional No pre-commitments Honest reporting

pressures

01 02 03 04 05

De-link valuation from Self-awareness

reward/punishment
UNCERTAINTY
 Sources of Uncertainty

01 02
Time of Value changes
valuation over time
 Reponses of Uncertainty

Better
valuation
models
Valuation
ranges

Probabilistic
statements
COMPLEXITY
 Two Sides of Complexity

01 02
Speed of Information
information accesibility
processing
 Risks of Complexity

Blackbox
Syndrome
Information
overload
Big versus small
assumptions.
IMPORTANCE
VALUATI
OF

ON
Portfolio Management
Acquisition Analysis
Corporate Finance
Legal and Tax Purposes
VALUATI
Types of

ON
 Third-party valuation

An opinion
on the value of a
business that is
obtained through
an independent
and complex
valuation process.
In-house Valuation
Assessing whether
selling the business, in
whole or in part, is a
good deal, or to
test a subsidiary
company for
impairment.
Valuation Opinion
An expert opinion or
expert report, consists
in an assessment process
limited to some aspects
or based on unverified
inputs
provided by the client.
Fairness Opinion

Verifying the reliability

of a valuation process
carried out by another
party, given the inputs
used, the method applied,
and the conclusions
reached.
Calculation Engagement

Not a real valuation, but

a check of specific inputs
used by another party.
Valuation Review

A critical analysis of the work

carried out by another valuer,
to verify its correctness or to
update it.
VALUATION

REPORT
 Valuation Report
01 Identity of the valuer 01 Nature and sources of information

02 Identity of the client (if any) 02 Business and environmental analysis

03 Asset(s) being valued 03 Special assumptions

04 Purpose of valuation 04 Applied method(s)

05 Valuation currency Type of report

05
06 Valuation date 06 Restriction on use of the report

07 Valuer’s work extent 07 Compliance to standards

limitation thereon
VALUER
 Respect for Professional Ethics
A professional valuer is expected to comply with
the following ethical principles:

Integrity
Competence Professional Behavior

01 02 03 04 05

Objectivity Confidentiality
 Independence

Objectivity in
researching and
selecting information

Expertise and
diligence in carrying
out the assignment
Thank You!