Professional valuation of unquoted equity shares, preference shares, debentures, partnership interests and business goodwill using the applicable Rule 11UA DCF, Book Value NAV, Rule 8 and net asset methodologies.
The Rule 11UA framework provides a book-value approach for determining the FMV of relevant securities using the company’s capital, reserves, accumulated losses and other prescribed balance-sheet components.
Includes the company’s equity and preference capital relevant to the valuation.
Includes the general reserve, capital reserve and revenue reserve identified for the calculation.
The securities premium account forms part of the prescribed valuation components.
Accumulated losses and deferred revenue expenditure are deducted as applicable.
The registered valuer’s DCF assessment considers forecast free cash flows, terminal value, discount rate and net debt to arrive at the equity value and FMV per share.
Projected free cash flow over the relevant 5–10 year forecast period.
Terminal value using the Gordon Growth Model or Exit Multiple.
Discounted cash flows plus the discounted terminal value.
The discount rate is a critical professional judgment within the DCF methodology and may incorporate the WACC or a risk-adjusted equity cost of capital using CAPM.
The supplied framework identifies the registered valuer’s certificate as relevant where the DCF method is used for determining the FMV of unquoted equity shares.
The framework identifies the Rule 11UA FMV as relevant where the transfer of unquoted shares takes place below the applicable FMV.
The supplied content identifies the Section 50D context alongside the Rule 11UA framework.
The Rule 8 methodology brings together the partner’s capital account, revalued goodwill, share of the firm’s net assets and applicable liabilities.
The goodwill assessment is identified as the most contested component of the Rule 8 valuation and requires a documented methodology.
The firm’s NAV is established by independently assessing the assets at fair market value and deducting the applicable liabilities.
Business goodwill may be assessed using different income and earnings-based approaches depending on the nature of the business and the purpose of the valuation.
Super-Profit = Actual Profit − Normal Profit.
Normal Profit = Normal Rate of Return × Capital Employed.
The method focuses on the maintainable earning capacity of the business.
A DCF-based approach may determine goodwill as the residual value after the tangible asset base has been considered.
Discuss your Rule 11UA, DCF, NAV, partnership interest or goodwill valuation requirement with A2Z Valuers.