Valuation of instruments and entities
VALUATIONS OF ENTITIES
Valuation for the purpose of transferring an organised part of the enterprise
What challenge/ problem did the client come with?
As part of a restructure, our client decided to hive off a part of the company and contribute it to a new entity.
What activities did we propose and carry out?
On the basis of the presented data and the assumptions adopted by us, as well as using the available market data, we valued the organised part of the enterprise alongside all its components, including intangible assets (customer base, trademark) in order to determine the value of the whole business for tax purposes and its individual parts for the purpose of posting in the new entity.
Valuation of IT systems (intangible assets) for an international group
What challenge/ problem did the client come with?
In connection with the combination of international teams within a corporate group, it was necessary to evaluate two parallel IT systems within that group.
What activities did we propose and carry out?
We made this valuation using the current replacement cost method, analysing the functionalities of both systems and hiring programming specialists to determine the workload attached to individual stages. Market data was used to determine programmers’ market rates. After both parameters were determined, the valuation of the systems was prepared.
Regular valuation of shares in companies for an investment fund
What challenge/ problem did the client come with?
An investment fund retained use to carry out periodic (quarterly and monthly) valuations of the fund’s shares in companies.
What activities did we propose and carry out?
We created a valuation model for each of the companies, periodically feeding it with current market data and the companies’ current performance figures. On this basis, current valuation updates are created.
Valuation for the purpose of purchasing a company
What challenge/ problem did the client come with?
Our client was involved in negotiations regarding the purchase of a company. As part of the work on the transaction, it was necessary to prepare a financial model covering in detail various aspects of the company’s operations.
What activities did we propose and carry out?
Our goal was to prepare a financial model that would allow us to see how the company’s value is affected by different operating parameters. We prepared a model that in the baseline scenario showed the company’s value from the point of view of the transaction. At the same time, the model parameters could be modified to show threats to the company’s operations and synergies with the buyer.
Valuation for the purpose of selling a company
What challenge/ problem did the client come with?
In connection with a planned transaction, our client needed a valuation of the company to be sold. The valuation was necessary to establish his negotiating position towards the buyer.
What activities did we propose and carry out?
We created the company’s operating model taking into account individual aspects that could affect the price. On this basis, the seller knew what elements would be key to the negotiations and how to present the value of his company.
Valuation of a trademark (intangible asset)
What challenge/ problem did the client come with?
For the purpose of a transaction, our client retained us to determine the value of a cosmetics industry trademark.
What activities did we propose and carry out?
Based on the forecasts and data on license rates, we estimated the trademark value using the “relief from royalty” income method.
VALUATION OF FINANCIAL INSTRUMENTS
Valuation of shares of two merging companies
What challenge/ problem did the client come with?
Our client was two companies that intended to merge. They asked us to determine the stock parity.
What activities did we propose and carry out?
In order to calculate the parity of the shares of the two merging companies, we prepared a valuation of those shares. In the valuation process, we reconciled both companies’ positions as to the parameters to be adopted in the model. We talked to the parties to establish an approach to the model assumptions that would be satisfactory to both. On that basis, we carried out a valuation of both entities and, consequently we determined the share exchange ratio.
Measurement of derivative instruments
What challenge/ problem did the client come with?
The client asked us for a valuation of options embedded in a loan agreement concluded with a lender from the same corporate group.
What activities did we propose and carry out?
The client signed an agreement in which the other party had the right to demand loan repayment at the exchange rate prevailing on the date of granting the loan. This provision was an option issued to the lender, and that option we were asked to value.
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