Valuation of Business and Integral Property Complexes, Securities

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Estimating the cost of business - this is the valuation of Company as a property complex that could bring profit to its owner. While carrying out the evaluation examination the value of all assets of the company is determined: real estate, machinery and equipment, stocks, investments, intangible assets. In addition, separately evaluated the effectiveness of the company, it's past, present and future earnings, the prospects for development and the competitive environment at the market, and then compares the measured with the companies-analogues. On the basis of such integrated analysis, is determined the real value of the business as a property complex that could be profitable.

Special case for estimation of business value is the assessing of the company and evaluation of its fixed assets. These services are also offered by our valuation company.
    
Because of the utility concept depends on the specific interests of the buyer, evaluators have to determine the different types of value: market, recovery, liquidation, investment, etc.
 
Estimation of the business value is needed in the following, the most typical cases:

  • sale of business;
  • sale of the enterprise (business) assets;
  • reorganization (merger, separation, absorption, etc.) and the liquidation of the enterprise carried out by its owners decision, and on the decision of the arbitral court in bankruptcy of the company;
  • buying and selling shares in the securities market (purchase of the company or its part in share ownership);
  • purchase and sale of the share (deposit) in the authorized capital of a limited liability company (the share is estimated in monetary units);
  • transfer of the company for rent. Valuation is important to assign rents and subsequent redemption by tenant (if provided in the lease agreement);
  • implementation of the investment project for the development of business (enterprise) when it is necessary to know for justification the original value of the business (enterprise);
  • obtain a loan against collateral property (mortgage);
  • company property insurance;
  • revaluation of fixed assets.

  
Of importance is the fact that a qualitative assessment of the market is not limited to view only certain costs associated with the production of goods, it necessarily takes into account the economic image - the position of the company in the market, the time factor, the risk level of competition. An appraiser comes to determining the value from the position of the economic conception of the company. Assessment, therefore, is the market value of any object, which generates income or cash flow and determined by the present value of expected future cash flow, discounted at a rate per cent, reflecting investor required rate of return for comparable risk investments.
   
Valuation of securities - is to determine the market value of equity securities (common and preferred shares), debt securities (bonds and promissory notes), derivative securities (options, futures), issued by government authorities, financial institutions (stock exchanges, banks), by and organizations.
   
The main situations of valuation of securities are as follows:

  • an assessment of the securities in the transactions of their purchase and sale;
  • an assessment of the securities in the restructuring of the company;
  • while submitting the securities in the charter capital of another legal entity;
  • an assessment of the securities when determining the value of collateral in lending;
  • at the transfer of securities in the trust management, etc.;
  • determining  the current market value of the company and its assets.

 

Key Contact

Valeriy Afanasyev

Valeriy Afanasyev

Valuation Partner
View bio

Related Publications

  • What does the “Valuation and Financial Modelling” service entail?

It is a comprehensive analysis of a company’s value and its underlying assets, performed through financial modelling techniques, that enable to determine the current market value by assessing projected cash flows, risks and future growth potential.

  • What assets does the valuation cover?

The process includes determining the value of real estate, machinery and equipment, inventory, financial instruments, and intangible assets. It also encompasses an analysis of the company’s performance and its competitive environment.

  • When is business valuation and financial modelling needed?

This service is essential when selling a business or a stake in it, conducting share transactions, undergoing reorganization or liquidation, securing loans against assets, insuring property, implementing investment projects, or revaluing fixed assets.

  • Why is it important to consider future cash flows?

Valuation is based on the principle that market value is determined by the present value of future earnings. This provides an objective view of a company’s investment attractiveness and its true ability to generate profit.

  • How does business valuation differ from asset valuation?

Business valuation considers the company as a single, integrated asset complex, whereas asset valuation determines the value of specific items such as real estate, equipment, or intangible resources.

  • When is securities valuation needed?

Securities valuation plays a key role in situations such as buying or selling shares, restructuring, contributing to authorized capital, transferring assets to a trust, or determining collateral value for a loan. In all these cases, having an accurate market value of securities is essential for making informed decisions.

Replacement Cost — the cost of creating or acquiring an equivalent asset, taking into account current conditions and technologies.

Cash Flow — the difference between income and expenditure, used to assess a business’s profitability and financial stability.

Discounting — a method of bringing future cash flows to their present value, taking into account risks and the cost of capital.

Investment Value — the value of an asset based on the specific interests and expectations of a particular investor.

Liquidation Value — the value of assets in the event of a rapid sale, usually lower than market value due to time constraints.

Intangible Assets — assets without a physical form, such as trademarks, patents, customer databases, software, and similar items.

Fixed Asset Valuation — determining the value of long-term tangible assets, such as equipment and real estate.

Comparative Analysis — a valuation approach based on comparing a company with similar businesses in the market.

Market Value — an estimated amount that reflects the most likely price of an asset or business under conditions of an open and competitive market.

Financial Modelling — the process of creating mathematical models to forecast revenues, expenses, cash flows, and potential business scenarios.