Importance of Valuation in Merger and Acquisition

Irrespective of the purpose for which mergers and acquisitions take place, their main aim is to help entities expand their size and value in the market. After a merger or acquisition takes place, the value of the entities involved equals the sum of their independent values. However, it often happens that mergers and acquisitions tend to have a negative impact on the entities involved due to incorrect estimation of entity value. Though there are precise approaches and methodologies to estimate the value of an entity when they are put to practical use it becomes a complex process. Therefore, it becomes significantly important to determine the right value of entities in mergers and acquisitions with the right approach and methods to avoid financial downfalls. 

Need for valuation of Mergers and Acquisitions 

During Mergers and Acquisitions, the intended purpose of the valuation of mergers and acquisitions is identified so that the calculated value matches the required purpose. A few instances where the valuation is done based on the purpose are:

• Corporate Restructuring;

• Calculating the consideration for the sale of business or acquisition;

• Liquidation of the company;

• Calculating the consideration for the sale or purchase of equity stake;

• During family separation, there is a need to calculate the value of assets and businesses owned by such a family;

• The portfolio value of investments is calculated by the virtue of Private Equity Funds or Venture Funds; 

• Purchase or sale of intangible assets such as rights, patents, trademarks, copyrights, brands, etc.

• For the purpose of getting listed on the Stock Exchange, calculating the fair value of the shares is required;

• Calculating the fair value of shares for providing Employee Stock Ownership Plan following the Employee Stock Ownership Plan guidelines.

How will R.K Associates help you in the Valuation of mergers & Acquisitions?

R.K Associates have an amount of good & rich experience in providing Valuation Services in India for Mergers and Acquisitions Our experts understand the valuation of the merger by which their main aim can be fulfilled which is to expand their entity size and value in the market without any risk. If any acquisition takes place, We also bring the valuation of Acquisition by which an industry can know what will be the exact value of their company after the acquisitions.