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Company valuation and M&A evaluation
Tips on how to do company valuation/ company valuation
Want to know how much your business is worth?
I work for Gannai, and the clients I do the most valuation for are those who need to do valuations for sales, valuations for capital increases, and major and minority shareholder rights disputes. Many times, the points of dispute are about beer, brand, or potential customer base, and the valuation needs to take intangible assets into consideration.
Evaluation methods can be roughly divided into three categories: market approach, income approach and cost approach.
Market Law
The valuation is based on the prices and related information of observable markets similar to the underlying assets.
Income Approach
The fair value is based on the discounted amount of the expected future income of the underlying asset, such as future cash flows or future earnings.
Cost Approach
It refers to the amount that needs to be paid to replace the underlying asset under the current circumstances. Its concept is similar to the replacement cost. When choosing a valuation method, it is necessary to consider whether all observable parameters have been used in the most effective way.
Once an enterprise has selected a valuation method for a specific asset, it must adopt it consistently in each period and regularly test its applicability. The fair value of an enterprise's assets and liabilities must be measured in accordance with IFRS, entrusted to professional appraisers using valuation methods, and audited by accountants before being used as a basis for investors to formulate investment strategies. Its importance is self-evident. Therefore, regardless of whether the enterprise, appraisers or accountants should understand the provisions of the standards, apply professional knowledge, and provide investors with appropriate and properly expressed financial statements. The standards discussed in this draft are expected to be published in the first half of 2010. As Taiwan will be fully aligned with IFRS in 2013, in addition to understanding the current IFRS, knowing the drafts currently under development will not only help us grasp the trends of future accounting development, but also allow us to make adequate preparations in advance, thereby accelerating the convergence with IFRS.
Merger and Acquisition Evaluation
In addition to business valuation, M&A structure and legal procedures cannot be ignored in M&A evaluation. There have been clients who discovered several years after the M&A or participation in Series A investment that their investment funds were not invested in the corresponding projects at all, and the investment structure failed to protect investors. The clients were even unable to participate in the shareholders' meeting to vote, and their investment funds were only used to make ends meet, with no return.
Our team members and partners have extensive experience in mergers and acquisitions. Our founder, in addition to being an auditor, has also worked in the corporate finance departments of several international banks. Over the years, he has participated in many domestic and overseas mergers and acquisitions and is experienced in mergers and acquisitions and corporate financing.