Valuation is the process of estimating what something is worth.
Value creation is key to business success.
However, valuation is often a controversial and complex subject. It requires an in-depth understanding of the market, company, competitor's financial and non-financial information, as well as the respective legal or regulatory environment.
Valuations have many uses including:
The Valuations division is a part of the Corporate Finance practice at Deloitte in South Africa, and provides a range of services to the Private and Public Sectors.
Several valuation methods are used to determine the value of a company.
A combination of methods develops mutually supporting evidence towards the valuation conclusion. The generally accepted valuation approaches are the Income approach, Market approach and Cost approach. Each valuation assignment is assessed to ascertain which methodology is most appropriate after considering, amongst others, the sector in which the asset operates and key value drivers of the asset being valued.
Indicative and independent valuations
We perform valuations of business enterprises and equity instruments for, inter alia, transactions, disputes and to assist management in making decisions.
Fairness opinions and Fair and reasonable opinions
We specialise in providing independent opinions which are required in terms of the JSE (related party transactions and share issues at a discount) and Takeover Regulation Panel rules.
We provide limited assurance valuation reporting for South African Reserve Bank purposes where transactions involve non-residents.
Purchase price allocation valuations
We value intangible assets for financial reporting purposes (International Financial Reporting Standard (IFRS) 3), relating to an acquisition. We also perform independent reviews of purchase price allocation valuations.
Profit forecast reviews
We review profit forecasts required to meet JSE Listings Requirements (field work performed by Valuations and signed off by audit partner).
Going concern reviews
We review cash flow forecasts in order to test the going concern assumption for financial reporting purposes.
We perform and review valuations for the purposes of determining the recoverable amount of assets for impairment testing in terms of IAS 36.
Solvency, liquidity and working capital review
We perform and review the preparation, content and presentation of information relating to the solvency and liquidity requirements in terms of the Companies Act.