Integrated

Valuation
Approach
(IVA)
Traditional vs Integrated
TRADITIONAL APPROACH INTEGRATED APPROACH
▸ models ▸ models
▸ calculation methods ▸ calculation methods
▸ context
Risk: the tendency to place too ▸ elements
much attention to the
QUANTITATIVE aspect,
without considering the
QUALITATIVE aspect

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Integrated Valuation Approach (IVA)
 a more comprehensive approach to valuation compared
to traditional approach
 uses methods and models as well as context and
elements relevant to valuation

▸ Three Steps:
1. Context analysis
2. Analysis of previous financial statements
3. Identification of the valuation model
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1.
CONTEXT
ANALYSIS
Context Analysis
▸ INTERNAL ELEMENTS ▸ EXTERNAL
1. company history, ELEMENTS
shareholders, and 1. industry;
governance; 2. industry trends;
2. organizational structure; 3. characteristics of demand;
3. products and services; 4. characteristics of supply;
4. competitive advantages. 5. competitors.

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2.
ANALYSIS OF
PAST
RESULTS
What is analysis of past results all
about?
▸ Examination of the past trends
▸ Example: Company X has a steady cash flow
and Z has a volatile cash flows. Does the two
companies worth the same value? If the
consistent of past performances is the bases,
Company X is more valuable more than
Company Y.

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What is analysis of past results all
about?
▸ Help understand and to have cohesive
background about past results.
▸ Thus, analysis of past result is very crucial in
business because this will set the expectation
of the investors toward every business if it is
worth investing.

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3.
CHOOSING
THE
VALUATIO
N MODEL
In choosing the appropriate valuation
approach, three points must be
considered:

1. The characteristics of the company and

industry
2. Documentation available
3. Purpose of the valuation

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The characteristics of the
COMPANY & INDUSTRY
Every approach has a respective focus on a certain aspect
of the company. One method may focus on the cash flow.
Another method may focus on the net income/profit. By
knowing the characteristic of the company and its
industry, a more appropriate method may be selected.

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DOCUMENTATION AVAILABLE
▸ Valuation is based on what info. Is
available.
▸ Example: If you are valuing a small &
start-up business, valuation method that
uses dividends can’t be used.

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PURPOSE OF THE VALUATION
▸ The purpose of the valuation influences the type of the
approach to use.
▸ Thus, the valuation approach shall be relevant to the
chosen purpose of valuation
For example:
▸ For an initial public offering (IPO) is based on
different logics compared to the valuation of a
minority interest in a private held company.
▸ Therefore, the purpose of the valuation affects the
choice of method/approach used.
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Thank you!
Any questions?

Members:
Balaba, Blessy Jade
Bautista, Elgie Nicole
Blo, Fayez
Cardeño, John Carlo
Silveron, Ella Mae

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