16/11/2011
Part 1: Valuation Before Purchase (Posted 16 Nov 2011)
Valuation can be complex but highly essential prior to any investments to be materialised. How should valuation be conducted in order to derive a correct price for proper negotiation depends largely on several factors as below:
1) Purpose of valuation
2) Subject to be valued - For example: a regular business with historical track record or a new start-up or a technology etc
3) Common standards of value - For example: fair market value Vs investment value
4) Premises of value - For example: the value of the subject is to remain as ongoing or to change hands.
5) Determination of valuation date
6) Consideration on information having material effects on the value of the subject
7) Determination of suitable approaches and methods
8) Application of premiums and discounts
The above list is not exhaustive as they should only be determined after proper scrutiny of the subject. In our next issues, we will expand on the topics of valuation, deal structuring and finalising of transaction documentations etc.
