“We offer quality valuation opinions providing a multitude of valuation services, matched with the type and status of the transaction object.”
Our definition: Valuation
Determination of the value of a company or SBU.
Local characteristics: No budgeting and biased asset valuation
The valuation process of Ukrainian companies is more complicated than for western European companies. The reasons for this are as follows:
- In many cases local companies lack a detailed budgeting which is mandatory for determining the estimated profitability of a business.
- Ukrainian accounting practice as well as asset valuation often follow the principle of “Form over Substance”. The given asset values often do not reflect the current market value as they are determined by certified governmental appraisers who usually use old state-determined fixed values. As a matter of fact, those values are often incorrect but fulfil the strict formal requirements.
Our solution: Various assessments for an accurate valuation
For the optimal valuation we employ various methods, all of which comply with International Valuation Standards (IVS). Depending on the prerequisites we realise one or more of the following valuation methods:
- The income approach discounts the net cash flows of a business and is usually employed when valuating going-concern businesses.
- The comparison approach compares the underlying business to recently conducted transaction objects. We employ this approach when valuing generic businesses (hotels, gas stations etc.) or in addition to the income approach.
- The cost approach is based on the question “How much does the investor have to spend in order to create an identical business?” In this case the cost expenditures as well as the risk costs are considered. This approach is often employed when dealing with insolvent businesses. Moreover, it is also used as an additional method, complementing the other two variants.
