BUSINESS VALUATION

Tricks of business valuation
The Companies Bill proposes that valuation of any property, stocks, shares, debentures, securities or goodwill, or any other assets or net worth of a company or its liabilities shall be made by a person with requisite qualifications and experience, and registered as a valuer under prescribed terms and conditions. The valuation should follow prescribed rules. Further, the valuers would be appointed by the Audit Committee, if any available, or the Board.
The valuations could vary from fixed tangible assets such as land, buildings, plant and machinery to complex financial instruments, including options, swaps, and so on. Other valuations for intangibles range from simple customer relationships to complex in-process research and development assets. Further, the valuations of business too are fairly complex and vary depending on the business model, maturity of the business, industry lifecycle stage, and so on. Valuation today has developed into a complex subject, with several valuers specialising in possibly just one area, say financial instruments.
Therefore, when the valuation-related rules are written, it is important to recognise these complexities and ensure the qualifications and experience prescribed take into account the complexities involved in that asset/ industry. A one-size-fits-all approach would not work, and might end up providing a tangible asset valuer the registration to value a complex financial instrument.
— Grant Thornton