It is not possible to indicate the average cost of expert stock valuation. Each enterprise is unique and has a number of indicators that affect its cost. Our company regularly conducts independent stock valuation in full compliance with the requirements of the National Securities and Stock Market Commission. The price of valuation of securities is calculated individually.
Expert evaluation of stocks is a special case of independent evaluation of corporate rights and is most often used for:
- the purpose of the additional issue. In this case, the enterprise is evaluated in its entirety with an indication of the value of 100% of the capital and one stock;
- minority stake buyback from shareholders;
- determining the value of the stocks of third companies that are on the balance sheet of the enterprise;
- presentation in court.
Cost, timing and scope of work of stock assessment depend on factors such as:
- are these securities listed on exchanges;
- do we have access to the reports of the issuing enterprise.
Approaches to assessment of stocks are chosen on the basis of:
- existence of enterprise activity;
- a profit from the enterprise;
- number of assets on their balance sheet;
- asset types on the balance sheet.
Market value and value of stocks
Please note that there is no direct connection between the nominal value of the stocks and their market value!
The nominal value of the stocks is just a historical fact. Once upon the establishment of an enterprise the founders formed the authorized capital and divided it into a certain number of stocks, having determined their «face value».
Depending on the success of doing business, the value of the enterprise and its shares is constantly changing in both large and smaller ways. However, the «face value» remains the same. If the company shows a profit, which also grows annually, the value of its shares will rise. Or the reverse situation – according to the financial results of the company shows losses, and also got loans. Then the value of the company may even be negative, and the market value of such shares will tend to zero.
This page contains a summary of the procedure for the expert valuation of shares. It is important to understand that there is a huge difference between determining the value of a controlling share (or the value of one share in a significant package) and calculating the value of a minority stake. As a matter of fact, in most cases these are two completely different services, which unite only their name «valuation of shares».
Valuation of control packages with allocation of value of one share
The main feature of the negotiations before the start of this work is that before the customer provides balance sheet and financial results report, the amount of work, and therefore the cost and time of the assessment, is completely unclear. This feature is due to the fact that when valuing shares (as well as when determining the value of corporate rights of an enterprise), in most cases, the assets and liabilities of the enterprise-issuer are revalued. It is clear that the cost of services of an appraiser for an enterprise that has only a computer and a desk on its balance sheet will be several times or tens of times lower than the value of valuation of an enterprise that has on its balance sheet, for example, several oil bases scattered throughout Ukraine.
After receiving the balance, we will ask you to send decrypts of some of its lines. Which will also become clear only after examining a particular balance. Only after that we will be able to come to you with a commercial offer, including the cost of expert evaluation of the shares and the timing of this work.
Most often, the valuation of shares is ordered for the purpose of additional issue, and the evaluation is agreed by the National Securities and Stock Market Commission. Another common application of our reports is their use in the procedure of buying back securities from minority shareholders. For this purpose, we recommend that the selection of the appraisal company be carefully considered, as there is a high probability of claims from other shareholders, and therefore the appraiser of the shares should be able to protect his report if it comes to court. We have accumulated a lot of experience in such works, so we will be glad to be of help to you. You are welcome to call and send us your balance sheet and financial results report. We’ll figure out.
Valuation of shares in minority packages
In this case, the situation is often more complicated than the valuation of the control packages. This is due to the fact that in most cases the minority shareholder does not have access to the accounting of the enterprise-issuer, and as you know, accountants are very reluctant to share their information. Sometimes the necessary source data for the calculations can be found in open sources, sometimes the minority still manages to get the information directly from accounting. But it’s the exception rather than the rule. Moreover, here the appraiser has another problem – correctly consider discounts related to the size of the package: low liquidity and lack of control rights.
Theoretically, the valuation of shares in a minority stake can be made on the basis of exchange or over-the-counter quotes or other information on actual transactions with these securities in the stock market. In practice, however, this is almost impossible because even if there are shares, they tend to be underrepresented and have too wide a range of prices to allow the valuer to make a reasonable conclusion about their market value.
On this basis, in order to conduct substantive negotiations on determining the value of minority shares, we ask customers to send information about the issuer and about the size of the package (number of securities). The easiest way to transfer such information is to send us a statement of securities.
Basic data for evaluation
Important!
Main information for independent valuation of stocks, as in the case of expert evaluation of corporate rights, is contained in the balance sheet of the enterprise. In the first phase of the negotiations, we need to see this balance and the financial results for the last reporting period. After that we will ask you to decrypt some lines of balance (depending on what is written in this balance sheet), and only then can we discuss the timing and cost of work.
In most cases, the valuation of securities requires revaluation of fixed assets of enterprise. Therefore, if you have fixed assets on your balance sheet, we will need to decrypt them (it specifies the name of fixed asset, the original cost and the date of putting on the balance sheet)).
The cost of work on minority stake valuation is also calculated individually. The peculiarity of such works is that the customer often does not have access to accounting documentation. In this case, we need information about the name, the issuer’s Unified State Register of Enterprises and Organizations of Ukraine code and the package size to form the cost of the work.
Also, the cost and timing of our work may be affected by whether there is sufficient information about the actual sale of securities of the same issuer on stock exchanges.
Our appraisal company carries out an independent evaluation of the shares on the basis on the certificate of the subject of valuation activity with the open direction «Evaluation of whole property complexes, units, securities, property rights and intangible assets»issued by the State Property Fund of Ukraine.
We are ready to offer you the most favorable conditions of cooperation and answer on all questions. You are welcome to call us!
