Where is Business Valuation Commonly Applied in Singapore?
The most common use – financial reporting
Business valuation in financial reporting encompasses activities like purchase price allocation, goodwill impairment testing, and portfolio valuations. When a company acquires another, a valuation is necessary to determine the price paid for each asset and liability. The acquiring company must then assess the goodwill of the acquired business and write off any lost value post-acquisition. In fund management, portfolio valuations are conducted for investor reporting, financial reporting, audits, and regulatory compliance.
The second most common use – transaction support
Business valuation in transactions involves activities like exit planning, mergers and acquisitions (M&A), and financing. For an Initial Public Offering (IPO), a valuation is conducted to inform potential investors about the company’s worth. When acquiring another company, the buyer performs a valuation to ensure a fair price. Similarly, when seeking financing, a company must value its assets before securing funds.
Other uses can include litigation and arbitration support
Business valuation in litigation and arbitration support encompasses activities such as shareholder disputes, bankruptcies, damages assessments, and the purchase of majority or minority shares. In shareholder disputes, valuations determine the amounts due to each shareholder upon the company’s dissolution. During bankruptcy, asset and liability valuations are essential for resolving debts with creditors and shareholders. Valuation principles are also applied to assess damages when a judgment has been obtained.
What Are the Key Expectation on Valuation of Regulators in Singapore?
The value of an asset, including businesses, that a listed company intends to acquire is crucial for investors’ decision-making, such as voting on the transaction. Companies should be aware of market and regulatory scrutiny when acquiring or disposing of assets. The SGX Listing Rules mandate independent valuations for significant transactions like substantial acquisitions and reverse takeovers, requiring rigorous procedures and transparent reports for shareholders and the public to evaluate the transaction’s merits.
Disclosure Requirements
Companies must disclose the following:
– The asset’s value
– The party commissioning the valuation
– The methodologies and assumptions used
– The valuation date
Meanwhile, the Board must ensure assumptions and estimates are reasonable and disclose any material uncertainties in projections. Boards should ensure valuations are conducted independently by qualified professionals and in line with recognized standards, such as those from the International Valuation Standards and IVAS.
Emerging Trends Affecting Valuation in Singapore
- Intangible Assets: Valuation of intangible assets, especially in businesses with new technologies, should be appropriately conducted and disclosed.
- ESG Considerations: Companies should account for ESG factors in their valuations, articulating their impact on long-term prospects.
IVAS Practice Note Compliance
IVAS Practice Note 2 outlines minimum disclosure requirements for summary valuation letters. Companies should refer to this early in the valuation process to ensure comprehensive and consistent disclosures.
Advantages of Valtech Valuation
To satisfy the demand of high quality and international level of valuation service in Singapore, Valtech Singapore offers valuation services performed by a team of valuers with outstanding credentials including:
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CVA, registered with the Institute of Valuers and Appraisers, Singapore (“IVAS”)
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ABV, accredited in business valuation registered with American Institute of Certified Public Accountants (“AICPA”)
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CFA, registered with the CFA Institute, a globally recognised credential in financial analysis
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Chartered Valuation Surveyor, registered with Royal Institution of Chartered Surveyors (“RICS”)
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FRM, registered with Global Association of Risk Professionals
Every business has its unique challenges. Understanding your current situation and the target business is one of the key steps in our valuations and assessments. With accumulated knowledge in various industries from serving over 200 public companies, our in-depth insights can serve your all-round valuation needs. Valtech’s Business & Intangible Asset Valuation Services can serve a wide range of purposes along your capital agenda.
What are the business services offered by Valtech?
- Business Valuation for Transaction Reference for SGX-listed, HKEx-listed and US Nasdaq-listed companies
- Financial Modelling of High-growth business for next Funding Rounds
- Pre-money Valuation of start-up business from Biotech, AI and cryptocurrency
- Statutory Valuation of the Financial Statements Prior to an IPO
- Statutory Valuation for an IPO application and Ongoing Annual Compliance
- Purchase Price Allocation (“PPA”) – SFRS(I) 3
- Goodwill Impairment – IAS 36
- Asset & Intangible Asset Impairment – IAS 36
- Portfolio Investments – SFRS(I) 9 in 2018
- Valuation Model Review and Validation
- Review support to Auditors
- Project Evaluation,
- Demand Forecasting,
- Financial Modelling,
- Feasiblity study
- Portfolio Optimization,
- Scenarios and Sensitivity Analyses,
- Real World Simulations and Strategies
- Advice on terms of funding raising agreements
- Shareholder’s Dispute Resolution
- Business restructuring and recovery
- Expert witness for court proceedings
- Matrimonial arguments
- Expert for financial market regulators
- Value strategies for distressed assets
- Estate, Tax compliance and defense
- Quantum of damages and loss profits
- Transfer pricing of business interests
Our Experience
To perform a comprehensive valuation, thorough business, accounting and finance knowledge are indispensable. Our business valuation team is experienced in wide range of professional services and our experience covers various industries, including but not limited to:
| Experience – Professional Service | ||
|---|---|---|
| Auditing | Banking | Sustainability Study |
| Financial Due Diligence | Risk Management – Internal Control Advisory |
Transfer Pricing |
| Experience – Industry | |||
|---|---|---|---|
| Agriculture | Automobile | Catering | Chemicals |
| Consumer & Retail | Cleaning & Environment Hygiene | Education | Entertainment |
| Electronic equipment | Financial services | Gaming & Mobile Apps | Health Care |
| Hotel & Tourism | Infrastructure | Insurance | Logistics |
| Manufacturing | Media & Entertainment | Mining | Multimedia |
| Pharmaceutical | Printing & Packaging | Property Development | Renewable Energy |
| Technology | Telecommunications | Utilities | Waste Management |
Our Expertise
All our valuation reports are signed by senior member of our business valuation team who are well qualified and hold one or more of the following professional designations:
Transaction, IPO & Fund Raising
For Business Owners, Entrepreneurs and Pioneers
Our valuations provide independent and credible opinions to support your capital agenda. From the day you decide to raise additional capital for growth, whether through a private round or an IPO, to the next day you identify a perfect target to acquire, our specialists from the business valuation team, located in Hong Kong and China, are ready to fulfil your all-round valuation needs.
Financial Reporting
For Chief Financial Officers, Company Secretary, Financial Controllers, Managers and Auditors
Our valuations for financial reporting purpose aim at supporting your audits of the financial reports in accordance to the various International Accounting Standards (“IAS”) or Singapore Financial Reporting Standards (International) (“SFRS(I)”). Majority of our team are holders of Certified Public Accountants. We are well equipped with the latest accounting knowledge and practices to facilitate efficient communication and coordination with your external auditors. We have good understanding on how our valuations can fulfill the audit requirements.
Purchase Price Allocation (“PPA”) – IFRS3 / SFRS(I) 3
• Identify the Intangible Assets with reference to the recognition criteria stated in IAS 38
• Construct business models, assess the Internal Rate of Return and Weighted Average Return on Assets
• Perform Reasonableness Check on the recognized Goodwill or Gain from Bargaining Purchase via Business Valuation
• Valuation of Contingent Consideration – IAS 37 & IAS 39
• Valuation of Financial Asset and Financial Liabilities, e.g. Profit Guarantee – IAS 39
Goodwill Impairment – IAS 36
• Identify the Cash Generating Unit (“CGU”). It is essential to match the coverage of the valuation model with the asset composition of the CGU under financial reporting. Our specialists, who are experienced in both auditing and valuation, provide comprehensive advice on how the CGU valuation can fulfill the IAS and SFRS(I) requirements
• Identify the cash flow generated from the CGU. Our specialists assist the management to identify and isolate the cash flow stream relevant to the CGU for the valuation purpose.
• Measure the recoverable amount of the CGU, including 1) Fair Value assessment and 2) Value-in-Use assessment.
Portfolio Investments – IFRS 9 / SFRS(I) 9
• Historically, private fund general partners and limited partners might take the investment cost to form the Net Asset Value (“NAV”) basis of their illiquid positions, and no subsequent NAV re-measurements are conducted until investment exits or fund liquidations. However, from 1 January 2018 onwards under IFRS 9, the historical cost is no longer allowed as a prudent proxy for fair value determination. Fund managers and investors shall be aware of the critical impact of IFRS 9 on their books and fund performance.
Asset & Intangible Asset Impairment – IAS 36
• Inventories – IAS 2. Our valuation is performed to assist the auditors in the determination of net realizable value.
• Biological Assets – IAS 41. Our Valuation is supported by the advice from our Biological Asset Expert Team on the biological attributes including but not limited to Species, Specifications, Health Conditions, Quality, Age, Life Span, etc.
Valuation Model Review and Validation
• Our team provides flexible solutions to management and auditors. Our review services can be tailored and performed either under an agreed-upon procedure on components, such as valuation methodology, major assumption parameters, calculation flows, discount rate, or under an one-stop full package.
Intangible Asset Valuation
• Intangible Assets – IAS 38. Our valuation experience covers various types of intangible assets including but not limited to:
Trademarks, Brand Name, Mining Right, Concession Right, Technical Know-how, Franchise Agreement, Copyright, Domains, Backlog Sale, Customer Relationships, Distribution Networks, Non-competition Agreement, Licenses, Patent, Software, Management Team etc
Project Evaluation
For Management, Strategists, Investment Analysts
We are not just number crunchers, but based on your investment goal we have this mission to inspire you and ideally, facilitate your next successful expansion in accordance to a systematic and scientific strategic framework. We can advise on your next capital allocation decisions from a holistic view from the financial investors and other stakeholders, combining with our unparalleled knowledge in traditional finance, behavioral finance, green and socially responsible investment frameworks.
Litigation and Tax Compliance
For Legal Advisers, Arbitrators and Tax Managers
We innovate our clients to solve really tough problems. Our previous experience and attention to the latest development in worldwide court cases and tax rulings can serve your various challenges below.
Litigation and Dispute Resolution
We have experience in acting as an expert witness for our client. Our expert witness report can assist you to measure your claim on damages and losses specific to your case context.
Tax and Transfer Pricing
Transactions, transfer of assets and equity interest between independent or related parties will oftentimes lead to immediate and prolonged tax impacts. Our specialist can provide valuation and pricing services in line with the local practices and OECD guidelines to support your specific tax scenarios.