Here are 5 areas where an independent valuation can make a difference:
Expectations
A solid valuation exercise, combining both fundamental and market analysis, allows for reasonable and defensible expectations regarding the asset’s value. This facilitates a more agile negotiation process and increases the chances of a successful closure.
Negotiation
A thorough valuation justifies the requested or offered price with specific financial metrics and market analysis. This enables a well-supported defense of the negotiating position.
Financial Return
It provides an estimate of the expected return from the transaction, allowing management to compare it with the cost of capital and required minimum returns. This helps adjust the offer to ensure the investment aligns with the company’s financial goals.
Independence
An independent valuer offers impartial advice to management about the asset’s value, as they have no economic interest in the outcome of the transaction. This ensures the valuation is objective and reliable, strengthening decision-making.
Risk Mitigation
Having an independent valuation in a transaction supports the claim that management acted diligently in setting the price. This helps reduce exposure to future questions and minimizes the risk of disputes regarding the transaction’s value.
The MKD team has extensive experience in valuations supporting M&A activities. For a confidential conversation, contact us at info@mkd-advisors.com.
