Valuation
A valuation should explain what has been valued, for which purpose and at what date, as well as the assumptions on which the conclusion depends. We prepare financial valuations for transactions, capital raising and shareholder decisions, supported by analysis and a clear calculation of value.
What we value
Businesses, financial interests and intellectual property.
Businesses and equity interests
Whole businesses, business units, controlling and minority interests, ownership stakes and shares. We distinguish enterprise value from equity value and consider the rights and restrictions attached to the interest being valued.
Securities
Equity and debt securities within the agreed instrument scope. The analysis considers contractual cash flows, maturity, credit risk, liquidity and any embedded rights.
Intellectual property
Patents, technologies, software, brands, know-how and related usage rights. We assess commercial use, income-generating potential, remaining economic life, the scope of the rights and restrictions on exploitation.
Methodology
Methods selected for the asset and the assignment.
Income approach
Estimate the present value of future cash flows. For businesses, this typically involves a discounted cash flow model. For IP, we consider the economic benefits of ownership and, where appropriate, relief from royalty payments.
Market approach
Analyse data from comparable listed companies, transactions or licensing agreements. Assess comparability in terms of growth, profitability, size, risk and the rights being valued.
Asset and cost approaches
Where appropriate, consider the value of assets and liabilities, or the cost of creating or replacing an asset. We also assess differences between development expenditure incurred and the value that can be realised commercially.
The valuation process
From defining the assignment to the valuation report.
- 1
Purpose, date and basis of value
Agree the subject, intended use, valuation date, basis of value and available information. Establish who may use the report and for which decision.
- 2
Business and financial analysis
Review historical performance, the business plan, non-recurring items and the principal value drivers. For IP, identify the income attributable to the asset and the further expenditure required to generate it.
- 3
Calculation and sensitivities
Apply the selected methods and assess how changes in key assumptions affect the result. Show the implications of factors such as discount rates, growth, margins and economic life for the valuation range.
- 4
Reporting and discussion
Document sources, methods, assumptions and limitations. Discuss the findings with the client and, within the agreed scope, support related shareholder or transaction negotiations.
Interpreting value
A conclusion is meaningful alongside its assumptions.
- The bridge from enterprise value to equity value may include net debt and other justified adjustments.
- Minority rights, control, transfer restrictions and liquidity must be assessed in the context of the specific interest.
- The value of software, a patent or a brand depends on economic use and associated rights; development cost alone may be an unsuitable measure.
- A valuation conclusion and a negotiated price may differ. The parties’ circumstances, synergies and deal terms also influence the price.
Deliverables
Typical outputs of an assignment
- 01Documented valuation report
- 02Valuation model and calculations
- 03Data sources and principal assumptions
- 04Sensitivity analysis and valuation range
- 05Conclusion for the relevant interest or asset
- 06Presentation and discussion of findings
Methods and permitted use of the report are agreed according to the valuation purpose and the information available.
Let’s discuss the assignment.
An initial discussion helps establish the business context, your objectives and the advisory support required.