Business Valuation Standard and Regulatory guidance?

Business Valuation Standards are basically codes of practice that are used in business valuation. At present there is no prescribed standards for business valuation in India, in many cases the valuation lacks the uniformity and generally accepted global valuation practices. In the absence of standards of business valuation the valuation is more on an art based on the professional experience of the valuer rather than a science based on empirical studies and logics.

In India, there are no formal standards on Business Valuation, however guidance can be taken from broadly these publications-

Revenue Ruling 1959-60 (USA)  Download -corporate valutions

Revenue Ruling (RR) 59-60 is one of the oldest guidance available on Valuation in the world but still most relevant for Tax Valuations specifically for Valuing closely held common stock. It is the most widely referenced revenue ruling, also often referenced for Non Tax Valuations giving primary guidance on eight basic factors to consider while doing any business/equity valuation.

ICAI Business Valuation Standard  Download -corporate valutions

ICAI Business Valuation Standards is one of the few trusted pieces of data to understand how to perform Business Valuation engagements. It addresses many valuation issues including form of Valuation report, data, assumptions etc. and tries to establish uniform concepts, principles, practices and procedures for Valuers performing Valuation services.

ICAI Technical Guide on Share Valuation  Download -corporate valutions

ICAI Technical Guide on Share Valuation was published in 2009 as Share Valuation gained importance. Thought there are established valuation approaches but the Objective was to apply the correct approach and principles essential for determining the correct valuation of a share.

PSU Disinvestment Valuation Guidelines  Download -corporate valutions

With the PSU divestment in full force, and on Disinvestment commission’s recommendations, the valuation methodologies to be followed for determination of Reserve price in case of sale of a company, detailed norms have been prescribed in this guidelines.

Erstwhile CCI Valuation Guidelines  Download -corporate valutions

CCI Guidelines was the only source of valuation till 1992. It had prescribed simple formulas under all three approaches of valuation namely Asset income and Market approaches which led to standard valuation.

Valuation nitty-gritties explained Download -corporate valutions

As of now there are no formal standards for business valuation in India (barring ICAI Valuation Standard which too is recommendatory) specifically for unlisted and private companies, numerous conceptual controversies still remain, even among the most prominent valuation practitioners. Interestingly, the answer to this lies in focusing more on basics of valuations. www.corporatevaluations.in by virtue of its extensive promoters capital markets experience, dedicated valuation team, in-house research wing and proven expertise in corporate transaction advisory has made an attempt by identifying, preparing and compiling research oriented articles on such debated issues on Business valuation, Relative valuation, SOTP valuation, ESOP valuation, DCF valuation, Enterprise valuation, Holding company discounts, Valuation in IT sector, RBI valuation, Regulatory valuations, Registered valuer, Start up valuation and Brand valuation which will guide you how to apply the range of valuation techniques, including their appropriate application, advantages and disadvantages.

Internationally Business Valuations are governed by broadly these standards-

  • Valuation Standards of American Institute of CPAs (AICPA)
  • American Society of Appraisers (ASA)
  • Institute of Business Appraisers (IBA)
  • National Association of Certified Valuation Analysts (NACVA)
  • The Canadian Institute of Chartered Business Valuators (CICBV)