All Round Startup Valuation Services
- Startup Valuation For Fund Raising Purposes
- Valuation Methods Unique To Startups
- Worldwide Recognized Startup Valuation Certification
- IBBI-Registered Startup Valuation Consultants
- Dedicated Valuer
- Valuation Of Startups Across Various Sectors
My Valuation – Startup Valuation Services In Bangalore
Just like any other business, valuation forms a crucial part of any startup. It is even more so important when the startups are seeking seed funding and need to establish the real market value of their businesses.
Startup valuation is a complex and often challenging process. By definition, valuation is a process that calculates the real net worth of a business based on the market value. The process takes into account various factors including the existing finances and future financial projection. Startup valuation is different in the sense that these businesses have no past financial track record to base the valuation around. This makes the startup valuation process a bit tricky, involving a wide array of business-associated factors.
Startup Valuation Services At My Valuation
To arrive at a completely bias-free and defendable startup valuation, we consider all the positive and negative factors manipulating the value of a startup. We believe that the startup founders have the right to be fully acquainted with the startup valuation process. In that regard, we work in close collaboration with the startup owners and keep them in the loop throughout the startup valuation process. Beyond seed funding, our startup valuation services assist entrepreneurs with near-future plans such as business expansion, share distribution and more. At My Valuation, we employ the most suited startup valuation methods only after considering the various factors that influence the startup company valuation. Moreover, our attentive approach ensures that each startup is assigned a dedicated registered valuer for its valuation needs
IBBI Registered Valuer
Certificate valid Worldwide
Dedicated Account Manager
Are You A Startup Organization Looking For Startup Valuation Services In Bangalore or Pan India?
My Valuation has amassed immense experience in helping businesses with the best startup valuation services. Our Registered Valuers possess all the necessary certifications and skillset to provide unbiased and satisfactory startup valuation services. Reach out to the advisors and Registered Valuers at MY Valuation, the leading startup valuation services provider in Bangalore or Pan India.
FAQs and Insights
Under the provisions of the Companies Act, a Registered Valuer’s report on the valuation of equity shares is mandatory under the following circumstances:
- Issue of new shares to shareholders under Section 62 except in case of a rights issue
- Merger, amalgamation, or restructuring under Section 230-232, requiring a valuation of assets or shares, or requiring a swap ratio to be calculated for a share swap on the merger of two companies
- Acquisition of minority shareholding under Section 236 by existing shareholders who hold over 90% of the company’s shares
- Allotment of shares for consideration other than cash and issue of sweat equity
- Buyback of shares from some or all shareholders under Section 68
- Liquidation of a company under the Insolvency and Bankruptcy Code, 2016
A Registered Valuer’s report on the valuation of equity shares is also recommended or considered “good to have” under the following circumstances:
- Rights issue to existing shareholders under Section 62
- Capital reduction of a company under Section 66
- Any other corporate actions that involve a value being assigned to equity shares or securities
Simply put, any company that raises funds by the issue of equity shares or compulsory convertible preference shares needs to acquire a valuation report from a Registered Valuer.
Start up Valuation
A Registered Valuer is a valuation professional who can value shares, securities, intangible assets, or tangible assets. Registered Valuers may be Chartered Accountants (for instance, in the case of equity valuations), engineers and surveyors (in the case of property or tangible assets), or specialized valuation professionals. Becoming a Registered Valuer involves a certain amount of training, more than 3 – 5 years’ valuation experience, and having a valid, ongoing certificate of practice (COP) to practice as an RV.
The RV qualification is granted and monitored by the Insolvency and Bankruptcy Board of India (IBBI) in coordination with Registered Valuer Organizations, so a Registered Valuer must be able to provide a valid COP and registration number.
So then, can any CA offer startup valuation services? The answer is NO. CAs cannot issue a valuation certificate for startup valuation anymore. Business valuations need to be conducted by a Registered Valuer.
What are the common overlaps of valuation requirements under various statutes?
We see an overlap of valuation requirements from multiple statutes in most cases now, often unnoticed by clients who may only be aware of one or two.
That’s because, for many companies, the transactions listed above are covered not just by the Companies Act but also by FEMA (Foreign Exchange Management Act, 1999), Income Tax Act 1961, SEBI guidelines, and/or international tax requirements. Multiple factors determine the applicability of these statutes, including the nature of the company, type of buyer and seller, the resident status of buyer/seller, and type of transaction.
For example, a fresh issue of shares by a private limited company to an overseas shareholder triggers valuation requirements under the Companies Act, FEMA, and Income Tax. A fresh issue to a domestic shareholder triggers valuation requirements under the Companies Act and Income Tax, and also creates additional requirements for the shareholder under Income Tax.
FEMA laws disallow purchase/sale/issue of shares to/from a non-resident entity if the transaction takes place above/below a certain price, determined by a valuer. Income tax laws also have provisions that tax a buyer or seller of shares for paying too low/too high a price. Further, while most laws allow ‘fair value’ as a basis of valuation (which usually means an income or market approach-based valuation), specific Income Tax provisions require a net-worth-based valuation, resulting in much lower values and a greater possibility of the buyer/seller being taxed.
FEMA laws require a Chartered Accountant or a CA firm to carry out valuations. Income Tax laws require CAs or merchant bankers (depending on the clause), as would SEBI guidelines. International tax requirements would usually be satisfied with a CA report. While it is expected that in the future, all of these will be expanded to allow Registered Valuers. That change has not taken place yet.
How do we deal with overlaps in valuation requirements?
Considering the valuation requirements triggered by various laws, it is important to:
- Create a single set of management forecasts that can be used for all valuation requirements to ensure consistency.
- Have fair values within a close range for the respective purposes as on a certain date. Some of these reports may become part of public records and it would definitely trigger tax assessments or FEMA action if there are two reports for the same valuation date, with very divergent values.
- Ensure that a report prepared for tax purposes is not submitted anywhere else, and so on. That’s because there are often statute-specific approaches or parameters which are included in reports, making them inappropriate for other purposes.
Why to get valuation from us?
For most companies, the ideal solution is to appoint a Registered Valuer who is also a CA with substantial experience in covering all types of valuation, who would therefore be able to cover multiple requirements consistently with no danger of diverging values being presented.
We have a team of Registered Valuers who are also Chartered Accountants and accordingly, a single valuation report from us can work under multiple statutes.
The DIPP has made amendments to startup India policy relaxing the requirement of Merchant Banker certification. Now the only prescribed persons to get a business valuation of shares of a startup is by a Registered Valuer. So we can help you with your valuation.
For unlisted companies under Income Tax Act, Merchant Bankers’ valuation reports are required to arrive at “Fair Market Value” under the discounted cash flow method (DCF Method). We have a Merchant Banker associated with us and such needs can also be taken care of.
|1||62(1)C||Valuation report for Further Issue of Shares||When a company having share capital proposes to increase its subscribed share capital by a fresh issue of shares, such shares shall be offered to: Existing shareholders i.e. Rights Issue, Employees under a scheme of Employees’ Stock Option. Any other persons except those mentioned above, if authorised by a special resolution: Issue of shares on a Preferential Basis In all of the above cases, the price of the shares issued must be determined by the valuation report of a registered valuer subject to prescribed conditions.|
|2||192(2)||Valuation of Assets Involved in Arrangement of Non cash transactions involving Directors||In case of sale or purchase of any asset involving a company and the directors of the company (or its holding, subsidiary or associate company) or a person connected with the Director for consideration other than cash, the value of the assets has to be calculated by a Registered Valuer|
|3||230(2)(c)(v)||Valuation of shares, property and assets of the Company under a scheme of Corporate Debt Restructuring||In case of a compromise or arrangement between members (such as in mergers or amalgamations) or with creditors (such as in corporate debt restructuring), a valuation report in respect of shares, property or assets, tangible and intangible, movable and immovable of the company, or a swap ratio report by a Registered Valuer is required. In case of mergers, the directors are also required to circulate a report to members specifying, inter alia, any|
|4||230(3)||Valuation report along with Notice of creditors/shareholders meeting –Under scheme of compromise/Arrangement||In case of a compromise or arrangement between members (such as in mergers or amalgamations) or with creditors, a valuation report in respect of shares, property or assets, tangible and intangible, movable and immovable of the company, or a swap ratio report by a Registered Valuer is required.|
|5||232(2)(d)||The report of the expert with regard to valuation, if any, would be circulated for meeting of creditors/Members||Same as above|
|6||232(3)(h)||The Valuation report to be made by the tribunal for exit opportunity to the shareholders of transferor Company –Under the scheme of Compromise/Arrangement in case the Transferor company is Listed Company and the Transferee-company is an unlisted Company||Same as above|
|7||236(2)||Valuation of equity shares held by the Minority Share Holders||In case an acquirer or person acting in concert with the acquirer acquire 90% or more of the equity capital in a company, they can offer to the minority shareholder (or the minority shareholder can offer to the acquirer) to acquire the minority shareholding at a valuation determined by the Registered Valuer.|
|8||260(2)(c)||Powers and duties of Company Administrator||A company administrator appointed by the Tribunal under section 258 of the Act to prepare a scheme of revival and rehabilitation of a sick company, shall perform such functions as may be directed by the Tribunal u/s 260. He/she may also cause to be prepared, inter alia, a valuation report in respect of the shares and assets in order to arrive at the reserve price for the sale of any industrial undertaking of the company or for the fixation of the lease rent or share exchange ratio.|
|9||281(1)||Valuing assets for submission of report by liquidator||A valuation of assets of the company prepared by the Registered Valuer is required in case of winding up, voluntarily or otherwise.|
|10||305(2)(d)||Declaration of insolvency in case of proposal to wind up voluntarily||Where a proposal for voluntary winding up has been made by a company, a declaration must be made by the board of directors that the Company has no debt or whether it will be able to pay its debt in full from the proceeds of assets sold in voluntary winding up. The declaration made must be accompanied by, among other things, a valuation report prepared by registered valuer of the assets of the company.|
|11||319(3)(b)||Power of Company Liquidator to accept shares etc, as consideration for sale of property of the Company||Any member of the transferor company who did not vote in favour of the special resolution and expresses his dissent therefrom in writing addressed to the Company Liquidator, and left at the registered office of the company within seven days after the passing of the resolution, may require the liquidator to purchase his interest at a price to be determined by agreement or the registered valuer.|
|12||Rule 2 of Companies (Acceptance of deposit) Rules, 2014||Exclusions from Deposits||As per the rule, deposit includes any receipt by way of deposit or loan or in any other form by a company but does not include, among other things, money raised by issue of debentures secured by a charge on company’s assets. The amount of such debentures shall not exceed the market value of the assets as determined by a registered valuer.|
|13||Rule 8 of Companies (Share capital and Debentures) Rules, 2014||Issue of Sweat Equity Shares||This rule applies to all companies except listed companies issuing sweat equity shares to its directors or employees. The rule prescribes that the sweat equity shares shall be issued at a price determined by a registered valuer as the fair price giving justification for such valuation. Also, the value of the intellectual property or know-how or any other value additions, for which the sweat equity shares have been issued to its directors or employees shall be determined by a valuation report of a registered valuer.If the sweat equity shares are issued for a non-cash consideration, the value of such non-cash consideration shall be based on a valuation report by a registered valuer. Additionally, if the sweat equity shares are issued pursuant to acquisition of an asset, the value of such asset shall also be determined based on a valuation report by a registered valuer.|
To simplify above legal maxims and for better understanding, Valuation certificate from a Registered Valuer is mandatory when there is
- A fresh issue of share u/s Section 62(1)(c) ( Typically when Funds are raised by a startup up a seed fund state or venture state when fresh share are allotted to new shareholders)
- When sweat equity shares are issued to directors or key employees then a valuation certificate shall be done by a Registered Valuer.
- Valuation required under Insolvency and Bankruptcy Code.
The Valuation has to done by a registered valuer only. You may contact us for your valuation requirement.
- Valuation of Equity Shares
- Valuation of Preference Shares
- Valuation of Compulsory Convertibles Debts
- Valuation of Shares under Companies Act, FEMA, etc.
- Valuation for Startups
- Valuation of Insolvency and bankruptcy
- Valuation in case of Take Over of Companies
- Valuation of Shares for Transfer Pricing under Income Tax
- Calculation of Fair Value as per IND-AS / IFRS/ Accounting Standards
- Valuation of Venture Capital
- Valuation Of Mergers and Demerger
- Valuation of Intangibles such patents, copyrights, technical knowhow, franchise agreements, etc.
- Valuation of Goodwill
- Valuation for Swap Shares in case of Amalgamation
- Valuation for Brands
- Valuation of Intellectual Property
Valuation of Software
- Valuation of Debentures
- Valuation for Family Settlement
- Valuation for Arbitration/Dispute Settlement/ Dispute Resolution
- Valuation for Specific Purpose
Business valuation is never easy for any venture. However, when you are a startup, it becomes particularly difficult to get a business valuation done, with little-or-no revenue or profits and less-than-certain futures.For mature, publicly listed businesses that have steady revenue and earnings, it’s a matter of valuing them as a multiple of their earnings before interests, taxes, depreciation, and amortization (EBITDA) or based on any other multiples specific to various industries.However, it is very difficult to value startup ventures that are not publicly listed and do not make steady sales or earnings.If you are planning to invest in a startup company or are trying to raise the capital worth of your startup, it is necessary to ascertain the business value of your venture.Below are three approaches mentioned towards the valuation of startup entities:
1.Going Concern Value -This value focuses on the overall earning potential of business entities.
-This value makes the assumption that business is a perpetual entity which is different from its promoters and will not be affected by any such external events.
2.Liquidation Value -It represents the amount received on selling off all the assets as well as settling liabilities.
-Intangible assets like goodwill, brand value, and so on, are certain important assets that need to be calculated appropriately in such method.
-It enables to set a benchmark below which the business should not be valued, as the same would not yield any gain for the shareholders.
3.Market Value -It relates to the companies listed at the stock market. It represents the price at which the company is trading at a recognized stock exchange.
-For this method, it needs to be considered that the price of the security trading on the stock exchange is more a representation of the market sentiment instead of the actual state of business. This price cannot provide a complete picture of the fundamentals and potential of the security / stock.
- Venture Capital Method
- Berkus Method
- Scorecard Valuation Method
- Risk Factor Summation Method
- Cost-to-Duplicate Method
- Discounted Cash Flow Method
- Valuation By Stage Method
- Comparables Method
- First Chicago Method