Valuation

When you are selling or buying a business, commercial property, intangible assets or intellectual property, you want to be sure that the price is clear to all parties. As a crucial part of the corporate finance service chain, valuations help to determine the best value that takes into account various scenarios and the value of similar properties. Our valuation team comprised of specialists with experience in business valuation, corporate finance, accounting, management, and business purchase and sale, is able to perform such tasks relying on their many years of experience.

We carry out valuation projects commissioned by the European Bank for Reconstruction and Development (EBRD) in Ukraine. Our appraisers have experience of cooperation and coordination of reports with the Big Four companies. The team of Nexia experts also has over 20 years of experience in conducting independent valuations of objects of various levels of complexity - from commercial real estate to businesses, and from investment projects to trademarks, both in Ukraine and beyond its borders. We are experienced in performing comprehensive asset revaluations and impairment evaluation of assets (asset impairment test) in accordance with International Financial Reporting Standards (IFRS).

Nexia is authorised to carry out valuation activities by the Certificate of the Appraiser of the State Property Fund of Ukraine (which acts as the regulator of valuation activities in Ukraine) and individual qualifications of appraisers, both Ukrainian and international, including The Royal Institution of Chartered Surveyors (RICS) and The European Group of Valuers Associations (TEGoVA).

Our company is large enough to apply in-depth industry and functional knowledge to each assignment, recognising that value drivers, assumptions and appropriate valuation methods can vary significantly from industry to industry, but it is also small enough to provide the individual approach that every client expects and deserves.

At the request of our clients and depending on the purpose of the valuation, we are guided by the following professional standards:

National Valuation Standards (Ukraine)
International Valuation Standards
RICS Valuation - Professional Standards
European Valuation Standards by TEGoVA
International Financial Reporting Standards (IFRS)

BUSINESS VALUATIONS

We have advised on numerous successful sales in various sectors of the economy. We monitor deal activity and analyse capital markets. Our knowledge and experience allow us to provide a reliable business valuation that you can trust.

What we do:

We work closely with you to understand the kind and real purpose of valuation you want.
We conduct our own independent and detailed valuation.
If our valuation is significantly lower than your expectations, we will develop a strategy to help you increase the value of your business to the desired level for selling.

Business valuation involves assessing the risks associated with a specific type of business and examining the entire business model. In most cases, business valuation is based on financial indicators of the business, as well as the income, EBITDA (earnings before interest, taxes, depreciation, and amortization), or cash flow it generates. As business is considered an investment, financial indicators and risks in the business are crucial elements for a reliable assessment of its value.

Business valuation is important for many reasons. First, it may be required in the process of attracting investment (e.g., Private Placement or IPO). Second, a valuation is important because it helps the business owner understand where and how the company is performing. Since relying solely on income or profitability growth can be somewhat deceptive, the value of the business is a critically important indicator of success. After all, isn’t that what we look at when considering public stocks? Business valuation for private businesses can provide strategic understanding and assist in developing plans to create greater value for owners that may not directly depend on profitability. In fact, it is the most important indicator that private business owners should focus on.

Additionally, business valuation can also be performed in the form of an integrated property system (IPS), typically comprising multiple production units or facilities operating according to their designated purpose for manufacturing specific products. An integrated property system (IPS) encompasses all assets of a business, as well as its accounts payable and accounts receivable.

When analysing an integrated property system, it is important to understand that it does not take into account the “value-added” or “hidden capital” created by the workforce and their efforts. In other words, it is the value that a business owner can get on the market above the price of their own net assets. Typically, accountants try to put this value of the business or company in the form of goodwill, which represents the hypothetical value of intangible assets.

The valuation of an integrated property system is a time-consuming and complex process that requires a sufficient level of appraiser competence, given the large number of objects included in the system. In doing so, appraisers need to utilize all available valuation methods, consider market trends, potential income from utilizing the components of the system, and their condition.

In order to calculate the value of a business, reliable financial information is essential, i.e., typically, the best starting point is the balance sheet and income statement for a historical period (usually 3-5 years). Once the necessary information is received, a series of meetings to gather additional information or documents will help assess the risks inherent to the business. Nexia DK’s appraisers will then select approaches and methods that are suitable for your specific business valuation task.

Business valuation services also include the assessment of stocks, bonds, options, derivatives, and complex financial instruments.

FINANCIAL REPORTING VALUATIONS

Financial managers are responsible for the true and fair presentation of financial information to their shareholders, creditors and other stakeholders. When preparing financial statements for these groups, companies typically present financial information in accordance with generally accepted accounting principles. These standards require certain assets and liabilities to be measured at fair value.

Fair value measurement may be a difficult task, that’s why involving independent appraisers is particularly important when an unbiased opinion is needed. The involvement of Nexia DK gives confidence to the auditors reviewing the company’s financial statements that the fair value has been determined objectively and has a reasonable basis.

Fair value measurements are required in a variety of circumstances, including:

For allocation of purchase price in business acquisitions.
For impairment testing of assets such as goodwill.
For fair value measurement of financial instruments that lack an active market.
For disclosure purposes and compensation expenses related to equity-based compensation plans, including stock options.

VALUATIONS OF DAMAGES AND LOST PROFITS

We provide services for valuating actual damages and lost profits (economic losses) incurred by Ukrainian businesses due to the military aggression of the Russian Federation, based on and taking into account the best international methods and practices. These serve as the basis for preparing expert opinions upon the request of the affected party for their own purposes, as well as for judicial and other bodies (courts, arbitrations, chambers, commissions, etc.).

In cooperation with our partners - law firms - we offer subjects of commercial activities a roadmap for obtaining compensation for damages and/or lost profits caused by the armed aggression of the Russian Federation at the expense of the assets of the Russian Federation seized in foreign jurisdictions.

The services are provided through the implementation of the following potential stages:

Fixation of damages, assessment of damages and/or lost profits (business losses).
Lawsuit filed with the Ukrainian court.
Lawsuit filed with a foreign court/commercial arbitration.
Assignment of claims to international financial organisations.

Calculating lost profits and/or damages is indeed one of the most complex areas of assessment, as it depends on numerous unique considerations. Obtaining a “winning” fair value directly relies on having evidence at every step of conducting such a valuation.

COMMERCIAL PROPERTY VALUATIONS

To ensure optimal results from real estate investments, it is important to seek advice from an expert from the outset. This will allow you to incorporate professional insights about the property during the planning and decision-making stages.

Nexia DK provides commercial property valuation services to a wide range of professionals, including banks, accountants, lawyers, foreclosure specialists, tax authorities, as well as businesses, private buyers and sellers.

Our appraisers have extensive experience in conducting valuations in the real estate sector and development projects. Our appraisers also have the capability to proactively respond to early market changes by providing timely and accurate information on the value of properties.

We provide valuation and advisory services throughout Ukraine for a wide range of real estate assets, including land plots, office buildings, shopping centres, hospitality, medical complexes, transport and logistics centres, specialised industrial facilities, as well as residential and other commercial properties.

TAX VALUATIONS

Tax valuation is important because it can affect the amount of tax charges. Tax valuation differs from other types of valuation and must be performed in accordance with certain parameters that arise from the requirements of tax legislation.

Tax valuation services include:

Valuation of assets for transfer pricing purposes.
Valuation of businesses and legal entities for tax purposes.
Valuation of real estate of individuals and legal entities for tax purposes.
Valuation for tax restructuring purposes.
Valuation for the acquisition of property by non-profit organisations.

Our experience, expertise and reliability in delivering well-documented valuation reports to the tax authorities are some of the main reasons why Nexia DK is trusted as the valuation company of choice for many business owners, accountants and lawyers.

The Nexia DK team has experience working in various industries, including healthcare, business services, technology, construction and engineering, food industry, consumer goods, distribution, transportation and logistics, financial institutions, and others. We have also invested significant resources in developing our valuation process to effectively utilize the time of business owners, executives, and their consultants.

INTANGIBLE ASSET & INTELLECTUAL PROPERTY VALUATIONS

For many businesses, intangible assets have become more valuable than their tangible assets, and this is the key to their success. The assets form the basis for increasing the value of the company. Therefore, it is important to understand the economic value of your assets through a valuation. Having an idea of how much your intangible assets and intellectual property (IP) may be worth will be beneficial for various transactions, including licensing, selling, gifting, etc.

But the need for IP valuation goes far beyond transaction pricing. Quantifying the value of specific intangible assets can help your company to:

Establish royalty rates, license fees, or sale prices.
Secure financing or investment.
Determine damages for intellectual property infringement.
Gain leverage in merger and acquisition negotiations.
Accurately assess and report on company finances.
Make decisions about the future of the company.

As a rule, companies that have effective management, protect and exploit their intellectual property are significantly ahead of their competitors in creating new sources of income and increasing shareholder returns.

We have completed hundreds of projects in the field of intellectual property for accounting and finance departments of companies, corporate boards, managers and directors, shareholders, creditors, and consultants.

OTHER VALUATION SERVICES

Reviewing and peer-reviewing valuation reports.
IER (Independent Expert Reports).
Value Enhancement.
Value-based management consulting (VBM).
Value Stream Analysis (VSA).
Risk management valuation, including Capital Asset Pricing Model (CAPM), Value at Risk (VaR).