Valuations

Each valuation is unique and requires an in-depth understanding of the business and the industry.

Valuations
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The valuation process is a combination of science and art and Agilequity uses a variety of methods and approaches, along with solid experience and judgment to make sure the valuations are credible and defendable.
 
We use efficient processes and systems to build our valuations and our valuations are built on robust financial models. These models are complex enough to reflect reality but simple enough that they are not complicated.
 
We build our models using best practices and ensure the model can be flexible to test sensitivity as well as have an appropriate level of ratios to test the reasonableness and appropriateness of the assumptions. 
 
Transparency and clarity are hallmarks of our reports.

The Valuations we Perform

We value all types of business in all types of sectors, and we provide valuation services for acquisitions, introduction of new B-BBEE shareholders, disposals, mergers, restructuring, shareholder disputes and B-BBEE verification exercises.
 
We also perform valuations for financial reporting including impairment testing, purchase price allocation (PPA), and the valuation of financial instruments such as share options. 
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Valuations

Business Valuation Services

Valuation Services
The objective of doing a business valuation is to get an independent view of fair market value of the business or asset. The fair market value being the price at which the business should exchange between a willing buyer and seller in an arm’s length transaction.
 
This is then the basis for several actions such as acquisitions, introduction of new B-BBEE shareholders, disposals, mergers, restructuring, shareholder disputes and B-BBEE verification exercises.
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Purchase Price Allocation Valuations

IFRS 3 requires that the purchase price of an acquisition be allocated to the identifiable tangible and intangible assets acquired, and liabilities assumed at fair value. The identifiable assets are then amortized over their useful lives.
 
IFRS 3 requires all assets are separately identified and carried at fair value on the acquirer’s statement of financial position with the balance allocated to Goodwill.
 
These valuations require a high level of expertise and cannot be performed by your auditors who are required to express an opinion on the fairness of the valuations done. Using an external independent party will simplify and ease the path of your year-end audit.
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Valuations Purchase Price

Option Valuations and Shares Based Compensation

Valuations
If your business issues options to staff as share based compensation you will need to determine the value of the options to determine the quantum of the compensation paid to staff. You will also need to value the option for the accounting under IFRS2.
 
Options issued as part of a B-BEEE transaction will need to be valued annually to determine the net value points at the end of each rating period. 
 
We use the Binomial model and the Black Scholes model to perform the shares-based compensation and option valuations.
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Intangible Asset & Goodwill Testing Valuation

IAS 36 requires that the recoverable amount of the following assets must be assessed each year, intangible assets with indefinite useful lives, intangible assets not yet available for use and goodwill acquired in a business combination.
 
The recoverable amount of other assets is assessed only when there is an indication that the asset may be impaired. The recoverable amount is the higher of fair value, less costs to sell and the value in use.
 
Fair value less the costs to sell is the estimated arm’s length sale price between knowledgeable willing parties less costs of disposal. The value in use of an asset is the expected future cash flows that the asset, in its current condition, will produce, discounted to present value using an appropriate discount rate.
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Asset

Independent Expert Report

Report
As per the South African Companies Act, No. 71 of 2008, certain transactions require an Independent Expert Report in respect of Affected Transactions.
 
An IER is prepared by an independent expert, approved by the Takeover Regulations Panel, to assist the company’s independent board to form and express an opinion to make a recommendation to shareholders with regards to the fairness and reasonability of an Affected Transaction.
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Exit Planning

Agilequity differentiates itself on the sell side M&A advisory service side by adding the Exit planning step into the process of selling where required.

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Exit Planning

Why Value?

Management’s primary task is to build shareholder value and valuations are a vital part of corporate decision making. How will you determine if shareholder value is being increased if you do not value the business?

More importantly what drives shareholder value, what levers can be pulled, and in what combination to optimise value. 

Valuations- Why Value

Other reasons for valuing your business or assets are:

  • Working out the right price to buy or sell a business in an M&A.
  • Calculating the value at which equity should be issued to new shareholders or partners.
  • For tax purposes.
  • To resolve shareholder disputes.
  • To determine fair value of employee and executive share options.
  • For accounting and reporting purposes – purchase price allocations, impairment testing, fair value accounting.
  • For statutory reasons including fair and reasonable opinions.
 
To determine net value points in terms of B-BBEE transactions.   
A vital ingredient for effective deal making is a sound valuation that the directors, shareholders, investors, financiers, buyers, sellers, and regulators can rely on.
 
If all parties trust the valuation, the deal speed and likelihood of completion will increase as the focus will be on the deal and not the value.
 

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