“Price is what you pay, Value is what you get” – Warren Buffett
TRANSIQUE CORPORATE ADVISORS is a boutique Transaction Advisory firm with strategic focus on Valuation, Transaction Advisory and Legal & Regulatory Services catering to the needs of the Corporates and HNI clients. With the Valuation, Transaction Advisory and Legal & Regulatory Services landscape evolving rapidly in India, businesses and the management needs to stay updated with the financial, legal, tax and regulatory aspects so that they can successfully implement the necessary corporate actions for continuity and growth. The need of the hour is a focused and vigorous firm that can help businesses navigate through complex issues.
Our cutting-edge knowledge of Valuation, Finance, Accounts, SEBI, Companies Act, Tax, FEMA, Stamp Duty and other regulatory laws coupled with deep understanding of business and our vast experience of working across the transactional landscape helps us in providing seamless advisory services assisting our clients take informed decisions which stand through the test of time.
Our founders’ fundamental approach of delivering the practical insights, innovative and personalized solutions for the best interest of our clients, across industries bring ‘excellence in our work’. Our advice has historically stood the test of times and Regulatory authorities. We not only advise on your Transaction but also act as your Transaction Catalyst from the early days of planning, setting the foundation, performing high level diagnostic review of available options, scenario analysis, recommending the pros and cons of options including the Tax, Financial, Legal, Regulatory and Commercial aspects to the implementation of the final option.
Our key differentiators are our comprehensive transaction focused approach; deep domain knowledge, sound Industry experience, local market knowledge; mandatory involvement of Partners and subject matter experts in each client assignments and providing independent, ethical and high-quality professional advisory services on your Transactions including M&A, Fund Raising, Investments, ESOPs or allied transactions.
Professor Aswath Damodaran
“Valuation is neither science nor an art; it is a craft, i.e., a skill that one learns by doing. The more one does it, the better one gets at it”.
Valuation is an integral part of commerce and vital part of financial markets which promotes transaction opportunities for both Companies and Investors including M&A, Fund Raising or Investments. While certain markets provide price for shares of companies or its assets at which buy and sale transactions can take place, the Intrinsic (Fair) value of shares of these companies or its assets can be materially different. It is possible to arrive at different valuation for the same asset in different contexts and also at different points of time. Thus, valuation is not absolute; it is context specific. Here comes the role of the valuer in estimating the fair value. It is worth mentioning that in case of closely held companies, the market does not exist and entire reliance is on the value ascertained by the valuer. Even though, it is accepted that divergent views are possible in the field of valuation, the purpose is defeated if the value is not authentic and genuine. Decisions arising from use of inappropriate values, in addition to causing unfair gain or loss to the parties, has the potential to distort market and misallocate National resources which may affect the economic growth of a Country as well.
The valuation process is a complex process and requires multiple skills (finance, accounting, tax, law, economics, knowledge of business and Industry etc.). In order to determine value, a valuer is required to make several judgments and must possess a mix of competencies.
Since high quality valuations are vital for efficient global economy, as a valuation profession we must ask ourselves, are we as a profession operating in a manner that enhances the public trust with our work? Any profession requires common education requirements, a common set of professional standards, and mechanisms to enhance and maintain the quality of work and the integrity of those that practice within that profession. However these prerequisites of a Profession do not fully exist in Valuation Profession (more so in India as are still evolving).
In fact, even internationally in the most developed markets, in their latest inspection cycle of Public Company Accounting Oversight Board (PCAOB) in the U.S, Fair Value deficiencies represented 31% of all audit deficiencies. Even though there are global valuation standards (International Valuation Standards of IVSC and US Valuation Standards) however the valuation standards guide on broader valuation principles. In order to facilitate auditing fair value measurements, Certified in Entity and Intangible Valuation (CEIV) credential and the mandatory performance framework (MPF) has recently come up in US to address one area where gaps in guidance are believed to still exist (that is, addressing the “how much to do” question including the “level of rigor,” “depth of analysis,” “scope of work,” “level of due diligence,” “extent of documentation,” and “extent of investigation etc.”
With the emergence of valuation as a Profession in India and implementation of Ind AS (Fair Value financial reporting) from 2016, more debate is happening on valuations and also on complex valuation methods to value the complex financial instruments like OCD’s, FCCD’s, Derivatives etc. Ind AS 113 is an Indian accounting standard on Fair Value measurement which is in line with its global equivalents ASC 820 (US GAAP) and IFRS 13.
The provisions of Registered Valuer under section 247 of the Companies Act, 2013 and Companies (Registered Valuers and Valuation) Rules, 2017 governing the practice of Valuation in India have come into force w.e.f. 18th October 2017. With effect from 1 February 2019, the valuation is undertaken only by a Registered Valuer in accordance with the Companies (Registered Valuers and Valuation) Rules, 2017.
The seriousness of Valuation profession in India at this point of time can well be understood as the government is in the process of bringing in a new law to set up a National Institute of valuers (NIV) to regulate and develop a special cadre of valuers and an institutional framework for them. The government (through MCA) is also working on preparation of Indian valuation standards absence of which is hurting the system. In the words of the Regulators in India, we the Professionals discharge secondary state functions as the extended arms of the regulator and work towards furthering the objective of the state. The DRAFT VALUERS BILL, 2020 is already in public domain.
Valuation has always been one of the most critical factors and also potential deal breaker in any transaction. The possibility that valuation of businesses or companies can be arrived at very differently by different people makes it all the more interesting and challenging. In any Transaction, often companies and their consultants attempt at upward/downward adjustments to the valuations based on the findings of Due Diligence, Demand and Supply, Industry position and economic environment at different points of time.
Valuation is an integral part of any transaction. The depth of analysis is most important in any Valuation engagement and the ability of the Valuer to follow the complete valuation process right from the understanding purpose of valuation, seeking relevant information requisition (and follow on questions) from company, performing financial analysis and normalization adjustments, understanding industry characteristics and trends, forecasting and reviewing company performance, considering and applying appropriate valuation methodologies to performing scenario analysis, value adjustments, documentation and reporting.
Needless to say that the experience of the valuer plays a crucial role in reviewing company’s financial model, selection and application of appropriate valuation methodologies and value conclusion after suitable discounts and premiums. Independent valuations are essential for the efficient working of the markets, businesses, government and all its stakeholders.
Even though the valuation is happening for more than 6 decades in India since the days of The Banking Regulations Act, 1949 the way of doing valuation has changed a lot since then. From a standardized formulae driven valuation approach with more focus on Assets, the valuation approach has now moved to a flexible and complex zone wherein the methodologies are choosen based on the facts of the case, purpose of valuation, stage of business, size of transaction, availability of information and also the Regulatory requirements under different laws. For valuation on a going concern basis, the focus is more on arriving at Business Valuation using Income and Market approaches.
The Regulatory landscape in India has changed a lot and has gained traction in the last 15 years and a number of Regulators have prescribed different valuation methodologies to be applied in particular transactions. As of now there are Regulatory and Tax valuation requirements in case of an Indian Company for Issue of Shares, Transfer of Shares, Indirect Transfer of Shares, ESOP Accounting and Tax valuations, Swap Ratio / Share Entitlement Ratio in a Scheme of Arrangement, Liquidation value and Fair value of Assets in case of IBC and in case of a Foreign Company outside India for Overseas Direct Investments (ODI) and RSU Tax valuations.
Additionally there is Valuation requirement for Financial Reporting purposes in terms of Valuation for Impairment purposes, Valuation for Purchase price Allocation of Assets (Tangible and Intangibles).
Under the Regulatory valuation requirement in India, onus is on Chartered Accountants, Registered Valuers and Merchant Bankers to undertake the valuation requirements.
It must be remembered that even though the Indian Valuation Standards are under formulation the global valuation standards (including IVSC valuation standards) already exist. The global valuation standards guide us that the Law of the Land override the Valuation Standards so in case of conflict, the Regulatory valuation provisions shall override the valuation standards and also the commercial understanding of the parties.
A valuer must have understanding of both the Valuation and also Regulatory provisions and match it with the commercial considerations after following the complete valuation process. The Valuation should ideally be compliant with the provisions of the Companies (Registered Valuers and Valuation) Rules, 2017 (even though these Rules are mandatorily applicable on the Companies Act and IBC valuations), other regulators are also adopting the same (SEBI has also now recognized Valuers as Registered Valuers). These Rules also state the requirement of following the valuation standards while performing and reporting, prescribe the contents of the valuation report including permissible caveats and limitations, and requires the maintenance of record of each assignment for specified period of time.
At Transique Valuation Advisors, we help clients with effective valuation strategies and hand-hold them during execution of the same. Our experienced professionals understand the valuation environment in India and can provide focused advice on every client situation – whether an investment, divestment, M&A, funding, insolvency, ESOPs or allied transactions.
There is always a fear of the unknown when embarking on an uncharted journey. Present times are very dynamic where orthodox approach of evaluation is not enough to take decisions, and many a times decisions are made to disrupt the status quo. Our approach in Transaction advisory is to help clients Think Outside the Box, shift gears and take their businesses to the next level.
Our Transaction advisory services encompasses the entire spectrum be it Transaction Planning, Structuring, Advisory and Implementation including Mergers, Acquisitions, Demergers, Slump Sale (including REIT’s, InvIT’s, NBFC’s etc.) value creation and unlocking (including AIF), support in newer endeavors (such as IBC, ARCs etc.) and evolving regulations and also Fund Raising and Corporate Deals.
Over the last several years, the Regulatory environment in India has become severely complex. On one hand the Government is looking at the ease of doing business in India to attract foreign capital, on the other, market dynamics, business environment and fund constraints are often forcing regulators and law makers to adopt tough positions in the implementation of these regulations. The regulators have, in last few years, substantially enhanced the onus of compliance on the business houses and / or their management teams that acts as an inherent motivation to pro-actively ensure compliances. At times this has also led to conflicts in the Commercial understanding of parties amid the changing laws [Ex. Vodafone Tax dispute on retrospective amendment of Section 9 (Indirect Transfer of Assets), Tata Docomo dispute on Exit Valuation understanding due to subsequent change in RBI Pricing norms etc.]
Our experienced professionals in the field of SEBI, Companies Act, FEMA including Foreign Direct Investment (FDI) and Overseas Direct Investment (ODI), Stamp Duty and other tax & regulatory laws including Income Tax, Competition Law, Insolvency law, Real Estate laws (RERA), Stamp Duties etc. help clients achieve their business objectives in line with the applicable regulations. Our team partners with clients in providing overall guidance, assist in decision making, seeking necessary approvals, overall compliances etc.