ASSET AND EQUITY VALUATION
Value management lies at the core of modern strategic management. Business and asset valuation has become a continuous process, supporting management in making informed strategic decisions. The most common reasons for valuing company equity and assets include:
- Determining the actual market value of the company or its equity for strategic decision-making (recapitalization, mergers & acquisitions)
- Assessing the market/fair value of equity, for sale to external investors, ownership transfers among existing shareholders, or inheritance-related transfers
- Goodwill impairment testing (for companies applying IFRS/IAS in full scope)
- Establishing the sale price of a legal entity in bankruptcy proceedings, in line with the Bankruptcy Law of the Republic of Serbia
The value of a company’s equity is not an absolute figure – it depends on the purpose of the valuation. Different purposes require different valuation standards, most commonly:
- Book value
- Market value
- Fair value
- Liquidation value
- Investment value
- Specific value
Valuation is typically carried out using one (or a combination) of the three main approaches, each with appropriate methods:
- Cost approach (net asset method, liquidation value method)
- Market approach (comparable company analysis)
- Income approach (discounted cash flow method)
The choice of approach and method primarily depends on the purpose of the valuation. Our team has extensive expertise and proven references in equity and asset valuation of companies of various sizes and industries, tailored to different objectives.
Intangible assets are non-physical and non-financial resources that can be identified as separate assets (rights) distinct from other company assets, with the potential to generate economic benefits in the future. Common forms of intangible assets include patents, licenses, software, databases, customer or distributor contracts, franchise agreements, trade names and trademarks, goodwill, and brands.
As their significance and share in total company assets grow, so does the need for valuing intangible assets and their specific forms.
Valuation of intangible assets is generally carried out using one (or a combination) of the following three approaches:
- Cost approach
- Market approach
- Income approach
The most commonly used method is the income approach, which estimates the economic benefits an asset is expected to generate in the future. Several income-based methods have been developed for valuing brands, trademarks, licenses, and other forms of intangible assets. The most widely applied methods are defined by international standard-setting organizations:
- ISO – International Standard Organization (ISO 10668 – Brand Valuation)
- IVSC – International Valuation Standards Council (IVS 210 – Intangible Assets)
While most people are familiar with the term “brand,” far fewer truly understand its meaning.
A brand is not the same as a trademark or trade name, although it may include them. It is not a product or service, nor is it simply the visual identity of a product, service, or company – though it encompasses these elements as well. A brand is the perception that customers or clients have of a company and its products or services – their overall impression of the company’s offering. When a sufficient (market-relevant) number of customers share a similar perception, the company can be said to possess a brand.
A brand represents a distinct value, or an intangible asset, because it implies customer loyalty and a stable client base. For this reason, brand valuation is an essential part of the value management process.
rand valuation refers to its financial (monetary) value, rather than subjective perception or qualitative assessment by customers.
Valuation of a brand and other forms of intangible assets is generally performed using one (or a combination) of the following approaches:
- Cost approach
- Market approach
- Income approach
The most commonly used method is the income approach, which estimates the economic benefits the asset is expected to generate in the future. Several income-based methods have been developed for valuing brands, trademarks, and trade names. In addition to methods defined by international standard-setting organizations – ISO (ISO 10668 – Brand Valuation) and IVSC (IVS 210 – Intangible Assets) – widely used approaches include those developed by leading consulting firms specializing in brand valuation, such as Interbrand and Brand Finance.
Contact Us:
valuation@alderman.rs
Contact Us:
Business and Finance Consulting Agency ALDERMAN CONSULTING