Valuation methodologies we apply
A valuation report typically applies one or more of these methodologies:
- Discounted Cash Flow (DCF) — project cash flows, discount at WACC, terminal value, equity bridge.
- Comparable Companies (CCM) — trading multiples of listed peers (EV/EBITDA, EV/Revenue, P/E).
- Comparable Transactions (CTM) — multiples paid in recent M&A in the same sector.
- Net Asset Value (NAV) — book value adjusted for fair-market-value of assets / liabilities.
- Net Asset Value (Statutory) — per Rule 11UA Schedule (for tax compliance).
The right method depends on use case, business type and statutory requirement.
The use cases we work on
- Fundraising — convertible note pricing, equity round pricing.
- ESOP allotment / exercise — perquisite valuation under Section 17(2)(vi).
- Share transfers between residents and non-residents (FEMA Rule 21).
- Buyback under Section 68 of the Companies Act.
- Mergers / demergers — share swap ratio under Section 247 of Companies Act.
- Estate planning — family transfers, trust funding.
- Litigation / arbitration — expert-witness valuations.
- Section 56(2)(viib) — angel-tax compliance.
- Indian GAAP / Ind AS — impairment testing, PPA, share-based payments.
Rules & sections that govern valuations
Different use cases trigger different statutory frameworks:
- Income-tax Rule 11UA — for unquoted shares (NAV with Schedule III adjustments).
- Income-tax Rule 11UAA — for ESOP perquisite valuation by a Merchant Banker.
- FEMA Rule 21 (NDI Rules) — for share allotment / transfer to non-residents (DCF or other internationally accepted methodology).
- Section 247 of Companies Act — valuation by registered valuer for various corporate actions.
- SEBI ICDR Regulations — for IPOs and rights issues.
How we run a valuation engagement
- Use-case mapping — which statute drives the methodology.
- Information gathering — financials, business plan, comparable peers, transaction precedents.
- Methodology selection — primary + cross-check method.
- Model build — DCF / CCM / NAV with full transparency.
- Report writing — assumptions, methodology, computation, conclusion, exhibits.
- Internal review — partner-level technical and statutory review.
- Submission & defence — we accompany clients to the AO / Tribunal where the report is challenged.
What you’ll need to share
- Last 3 years audited financials.
- Year-to-date management accounts.
- Business plan / forward projections (where DCF is the chosen method).
- Capitalisation table.
- Funding history and prior-round terms.
- Asset register and FMV of land / building.
- Investments register with FMV.
- Litigation / contingent liability schedule.
How long & how we charge
Standard valuation report: 3–5 weeks. Litigation / forensic valuations can run 6–10 weeks. Fixed-fee, scoped at engagement start. Witness or expert testimony billed separately on a daily basis.
Common questions on business valuation
Who can sign a valuation report?
Depends on the use case. Income-tax Rule 11UA / Schedule III — CA. ESOP perquisite (Rule 11UAA) — Category-I Merchant Banker. FEMA Rule 21 — CA or Merchant Banker. Companies Act Section 247 — Registered Valuer (post-2018 framework). We have all relevant qualifications in the team.
Is a single report valid for multiple purposes?
Sometimes — if the methodology and date align. We typically scope each engagement to one use case to avoid statutory mismatch.
What if the AO challenges the valuation?
We attend the assessment / appeal proceedings, defend the methodology, and provide supplementary documentation. The report is built assuming it will be challenged.
Can the same firm act as auditor and valuer?
Generally yes for non-listed companies. For listed companies and certain regulated entities, independence rules apply — we either run a Chinese wall or recommend an independent valuer.
Talk to a partner.
A 30-minute call with a partner — no deck, no follow-up email blasts. Just a read on whether we’re the right team to issue your valuation report.