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.

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

1. Intangible Assets: Valuation of intangible assets, especially in businesses with new technologies, should be appropriately conducted and disclosed.
2. 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.

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 Modelling of Your High-growth Business for Funding Rounds

We will meticulously analyze and visualize your business ideas and expansion plans through our comprehensive financial and economic models, industry and market research, and supported by technical reviews. These insights will undoubtedly be of great interest to your potential investors.

Statutory Valuation of the Financial Statements Prior to an IPO

Apart from the business prospect, your historical pre-IPO financial results may be critically impacted by the enterprise value at the reporting dates. Our assessments on the fair value of various classes of instruments issued prior to an IPO can provide additional assurance to your auditors, regulators and future public investors.

Statutory Valuation for an IPO Application and Ongoing Annual Compliance

The reporting accountants, stock exchange, and regulators will thoroughly assess and review the valuations of your business and financial results. We are committed to adhering to the highest standards of valuation methodologies and the latest practices widely accepted by market participants. This ensures that your disclosed valuation results will be easily comprehensible to the public users.

Valuation for Acquisition, Restructuring, Joint Venture, Divestiture and Privatization Purposes

The valuation of a target company is the paramount factor influencing the deal pricing and structure, regardless of which side of the agreement you are on. Our team ranks at the forefront of professional valuers in recent years, with the highest number of announced public circular documents featuring our business valuation results attached.

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 International Financial Reporting Standards (“IFRS”). In Hong Kong, we follow HKAS and HKFRS. In Singapore, we follow SFRC and requirements given by ACRA. 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.

We assist 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.