While the value of an asset / business probably does not exist as value would depend on valuation standard and definition - e.g. fair market value vs investment value – we believe we have adequate competencies, capabilities, capacity and experience to solve your valuation questions. Whereas the standard of a valuation will depend on the purpose, the analytical framework, including the valuation approach is impacted by a range of factors such as the subject company’s industry, country resides in its stage of development and the capital structure. However, in line with the generally accepted International Valuation Standards (IVS), basically 3 valuation approaches are considered: the income approach, the market approach and the cost/equity approach.
The valuation standard used will be subject to the purpose of the valuation. Additionally, valuations do not only require a solid grasp of how value has been created prior to the valuation date, but also, and in most cases more importantly, how it will continue to be created in the future. The foundation of (business) valuation is the ability to understand how a company generates its ideas or concepts and deploys its invested capital. The process of value creation does not follow a single path, but rather many paths that vary by industry and the company’s position in its life cycle. Understanding this process is at the heart of our extensive valuation experience, whether we are performing a valuation analysis for a variety of purposes such as:
For tax/transfer pricing valuation purposes, the arms’ length principle comes into play when considering the fair market value of an asset. However, this would normally not directly impact the valuation approaches considered.
Moreover, although the OECD and local tax jurisdiction might provide special guidance with respect to so-called hard-to-value intangibles, Tiberghien economics does not believe in such a concept. However, we do believe that the valuation approaches to be considered and business modeling on the other hand – which would in view of the (intangible) assets to be valued consist of forecasting models taking into account the relevant facts and circumstances, as well as the relevant characteristics (considering appropriate probability distribution models) in order to estimate the relevant cash flows – together form an analytical framework which suits the valuation exercise of (intangible) assets quite well.
In view of your corporate, strategic planning including business restructurings, proper valuation analyses are deemed required taking into account the high probability of scrutiny by local tax authorities. Moreover, business restructurings are discussed in Chapter IX of the OECD TP Guidelines, and consists of redeployment of functions, assets and/or risks, whereas it may involve the transfer of something of value. It may also or alternatively involve the termination or substantial renegotiation of existing arrangements. Typical business restructurings include:
If something of value is transferred, this should occur at arm’s length. Typical transfers that can arise from business restructurings include the transfer of tangible assets, of intangible assets and of an ongoing concern. An indemnification may be due when there would be detriments suffered in connection with the restructuring by the restructured entity, such as restructuring costs (e.g., write-off of assets, termination of employment contracts), re-conversion costs (e.g., in order to adapt its existing operation to other customer needs), and a loss of profit potential. The analytical approach Tiberghien economics applies consists also an analysis of the options realistically available (ORA) to every entity involved in the business restructuring. The application of the ORA not only results in a more detailed understanding of the business rationale behind the business restructuring (for all stakeholders involved), it also provides the right tools to document the business restructuring in order to be fully prepared when the business restructuring would be scrutinized.
Additionally, Tiberghien economics can also solve your valuation questions related to treasury transfer pricing issues, such as the valuation of:
We have adequate competencies, capabilities, capacity and experience to solve your M&A valuation questions and to assist you in maximizing the value of your business prior to the start of an M&A process, by a.o. making your business ready for sale in the near future.
Furthermore, we can provide initial pre-acquisition / merger or sales pricing analysis including the estimation of accretion/dilution impact on earnings taken into account possible synergies to be realized by the M&A transaction. Additionally, Tiberghien economics can provide advice regarding the value during the M&A price negotiation process.
The valuation process in view of reporting purposes needs to be in accordance with local GAAP or IFRS / IAS. Hence, depending on the regulations of the jurisdictions involved, Tiberghien economics uses the most appropriate reference framework to analyze the assets involved.
For instance, when performing an impairment test in view of intangible assets, we would make such reviews, analyses and inquiries as we would deem necessary and appropriate under the circumstances at hand, such as review of revenue and expense forecasts of the company in view of the intangible assts as well as the review of publicly available financial information. Additionally, more quantitative information provided by the management is also considered.
In view of dispute and litigation purposes, We have adequate competencies, capabilities, capacity and experience to perform a variety of economic analyses for legal purposes:
In all the above, the story behind the asset(s) to be valued is an integral part of the analysis as it can describe and integrate the financial statements and other numbers with the valuation models applied and make the valuation analysis meaningful withstanding scrutiny successfully. Therefore, Tiberghien economics has assembled a knowledgeable and experienced team of professionals. At the core of this team is a fundamental understanding of business valuation in general. We (currently) do not perform - but can arrange for (with aligned experts) - fixed tangible asset valuations and actuarial services. In order to safeguard our independence we will never perform auditing or assurance services.