Different valuation methods using different approaches can give different results in determining the value of a business. In an ideal market, all three approaches should lead to the same value, but in practice, the values obtained by different methods can vary significantly (from 5 to 50% or even more, especially when valuing a business). In this regard, the Federal Valuation Standards of Russia and the International Standards put forward requirements for summarizing different results within the framework of the “final value of the value of the object of appraisal”.
The final value of the value of the appraisal object- the value of the appraised object, obtained as a result of the appraiser's justified generalization of the results of calculations of the value of the appraised object using various approaches to appraisal and appraisal methods. To bring together disparate cost values obtained by classical approaches to valuation, the results are harmonized.
Reconciliation of valuation results is the receipt of the final valuation of the property by weighing and comparing the results obtained using different valuation approaches.
To agree on the results, it is necessary to determine the "weights", according to which individual previously obtained values will form the final market value of the property, taking into account all significant parameters based on the expert opinion of the appraiser. Coordination of the results obtained by different assessment approaches is carried out according to the formula:
where С total - the total cost of the object of assessment;
With zp, With cn, With dp - the costs determined by costly, comparative and profitable approaches;
To zp, To cn, To dp - the corresponding weight coefficients selected for each approach to the assessment.
With respect to these coefficients, the following equality holds:
Upon agreement, when determining the weight of each approach, the following are taken into account (expertly): completeness and reliability of information; purpose fit; advantages and disadvantages of approaches in a particular situation, etc.
The weights selected for each valuation approach are rounded to the nearest 10% (less commonly 5%) for the purpose of using these weights for reconciliation. Based on the rounded weights, the agreed value of the property being valued is calculated. The resulting value is rounded off.
Table 1.2 provides a comparative analysis of traditional approaches to enterprise valuation.
Table 1.2
Comparative analysis of approaches to enterprise valuation
|
Advantages |
Flaws |
|
|
costly |
It takes into account the influence of production and economic factors on the change in the value of assets. Gives an assessment of the level of technology development, taking into account the degree of depreciation of assets. Calculations are based on financial and accounting documents, i.e. assessment results are more justified |
Reflects past value. Does not take into account the market situation at the valuation date. Does not take into account the prospects for the development of the enterprise. Does not take into account risks. Static. There is no connection with the present and future results of the enterprise |
|
Profitable |
Takes into account future changes in income, expenses Takes into account the level of risk (through the discount rate). Takes into account the interests of the investor |
Difficulty in predicting future results and costs. It is possible to use several rates of return, which makes it difficult to make decisions. Does not take into account market conditions. Labor intensity of calculations |
|
Comparative (market) |
Based on real market data Reflects the current practice of selling and buying Takes into account the influence of industry (regional) factors on the price of the company's shares |
It does not clearly characterize the features of the organizational, technical, financial preparation of the enterprise. Only retrospective information is taken into account. Requires a lot of amendments to the analyzed information. Does not take into account the future expectations of investors |
Based on these data, we can conclude that none of them can be used as the main one. Therefore, to determine the final value of the company's market value, the advantages and disadvantages of the approaches used and the quality of the information obtained are analyzed with the assignment of a weighting coefficient to each approach.
According to researchers in the field of business valuation Esipov V.E., Makhovikova G.A., Terekhova V.V., Damshakov A.N., the direct application of classical methods in Russia is difficult due to objective reasons:
1. Underdevelopment of the Russian securities market.
2. Informational secrecy, leading to the difficulty of using, first of all, a comparative approach.
3. The need to make a large number of adjustments related to the lack of transparency of financial statements. For evaluation, management should use management accounting data, which must be adapted for the purposes of evaluation.
4. Uncertainty with long-term planning in Russian conditions(as a rule, activities are planned in Russia for one year) leads to difficulties in applying income valuation methods. Mostly retrospective data for past periods is used.
5. The accounting valuation of assets is significantly underestimated compared to the market, which leads to an underestimation of the value of net assets. A market revaluation of all fixed assets and intangible assets is required.
6. Traditional evaluation methods give a "point" result in time, which cannot be used for operational or strategic management of the enterprise. None of the situations that are mandatory for evaluation suggest the possibility of further monitoring.
7. Difficulty in finding information and cumbersome calculation. The use of business valuation on a regular basis should be as simple as possible and the result visible.
Thus, of the existing approaches to valuation, the income method most accurately reflects the value of a company as a business, that is, a working mechanism that makes a profit. However, the use of predictive data raises doubts about the accuracy of the calculations. The sources of information for using the comparative method are very limited. Russian market corporate control (bankruptcy and mergers and acquisitions) operates mainly outside the organized stock markets, and the volume of redistribution of shares in the economy (industry) of Russia, taking place outside the organized markets, is in principle difficult to assess. As a result, in Russian conditions, the property approach to valuation of enterprises is often the most relevant. This is primarily due to the availability of reliable and accessible initial information for calculations (since the main information base of the property approach is the balance sheet of the enterprise), as well as the use of well-known, traditional for the domestic economy cost approaches to assessing the value of an enterprise. But the main disadvantage of the property approach is that it does not take into account the future possibilities of the enterprise in obtaining net income. In addition, the calculation of cost based on the cost approach does not make it possible to identify sources of value creation, and, therefore, excludes their management.
Thus, most valuation specialists come to the conclusion that the methodological basis for business valuation is imperfect. “Methodologies that offer one weighted estimate of the value of a business can be used solely for the purpose of selling a business in one form or another.” But what if the value of the business is needed by managers not for sale, but for the formation of a strategy and acceptance management decisions aimed at the implementation cost approach to management? At the same time, the methods of business valuation for making managerial decisions, proposed by Western economists Modigliani, Damodaran, Copeland, do not find their application in Russia, as well as in other countries with emerging and inefficient markets, which are characterized by a number of similar problems, such as high the degree of dependence on foreign investment and borrowing against the background of, as a rule, considerable domestic and / or external debt, the weakness and instability of the financial sector due to the burden of banks with significant bad debts of enterprises, the underdevelopment of infrastructure, the imperfection of the regulatory framework, the lack of development of the system of financial reporting of issuers or its inconsistency with international standards and their associated information opacity and high level of risks, information opacity, where there is no developed stock market, and, consequently, there is no market value the enterprises themselves. And due to the low degree of market efficiency in the arsenal of domestic companies, there are no fully adapted methods for assessing a business.
A complete evaluation process involves the use of three approaches: comparative,
costly and profitable. As already noted, the obligation to use them is fixed
in almost all Valuation Standards. The evaluator may not use any of the approaches,
but must justify this refusal, since it has the right to independently determine within the framework
each of the approaches specific evaluation methods.
It is quite natural that the evaluation results obtained by different approaches (methods) give
different amount of cost. And therefore, at the final stage of the assessment, the task of coordinating
the results obtained and justification of the final value of the cost.
Each approach to valuation has its own advantages and disadvantages, and therefore
it is impossible purely formally to give preference to any one (Table 6.10).
Table 6.10
Advantages and disadvantages of approaches to estimating the cost of machines and
|
Advantages |
Flaws |
|
|
Comparative |
Based on real market data Reflects market conditions and prevailing |
Initial information quickly becomes outdated and needs to be updated Price distortion |
|
costly |
Takes into account the impact on the cost of production and technological factors Assessment methods |
Does not reflect the market situation and the influence of the demand factor on the assessed objects Dust |
|
Profitable |
Gives an estimate of the value from the standpoint of the interests of the user (investor) Reflects |
The complexity and uncertainty of forecasting future income and expenses for |
The use of several approaches increases the reliability of the assessment results, gives an idea
about the cost of the same object from different positions: manufacturer, dealer, buyer,
investor, etc. In this regard, we can note some parallels between the tasks of evaluation and
pricing, since predicting the cost is, in fact, the same as predicting the price.
If any method of the cost approach is used, then, using economic information about
consumption rates and prices of resources received from the manufacturer or seller, unwittingly
model the process of cost pricing and obtain the cost price of the offer as a result.
Because of this, the cost estimate, as a rule, turns out to be overestimated, unless, of course,
serious errors were made in the initial information involved.
If the method of a comparative approach is used, then the "costly spirit" of the result obtained
much less, but still there. This is due to the fact that documented
confirmed price information for analogues, and this information is usually extracted from price
brand catalogs and price lists, i.e., they operate with the same offer prices. Eventually
possible overestimation of the results, although very moderate.
Among the three approaches, only the profitable one gives a direct path to the demand price forecast. Price,
calculated by any method of income approach, represents the upper limit
the price that the buyer (investor) can agree to, guided by common sense
comparing their current costs with future income from owning the goods they buy.
Naturally, for the buyer (investor), the price is the more profitable, the lower it is, all other things being equal.
conditions. At the same time, the lower the price, the lower the probability of a purchase and sale transaction for a given
product. Since the buyer (investor), like the seller, is interested in the transaction, he can
agree to some increase in the price charged. These considerations lead to the conclusion that
what in general case valuation based on the income approach gives a slightly underestimated result,
unless, of course, mistakes were made in the choice of initial data when calculating future income and
expenses.
Another point to consider when using this approach. Ask price
is quite individual, each buyer for the same product can have his own -
Her. This explains the individuality of the investment value assessed for a particular
project. Therefore, in order for the value estimated by the income approach to correspond to the most
probable demand price, it is necessary to carry out an assessment for the conditions of the most typical,
typical application the object being valued.
The first perception of the results obtained by different approaches (methods) is
depending on how the cost values are located in relation to each other. One
the situation when the cost values are “heaped” do not differ much from each other.
It hardly makes sense here to ascertain the preferences in relation to the individual approaches used.
(methods). You can be satisfied with the calculation of the arithmetic mean value of the cost.
Another situation is when the cost values for two approaches (methods) are close to each other, and
the third value shows a significant deviation from the first two. Close in meaning
quantities naturally inspire more confidence, and a quantity similar to an "outlier" needs to be
additional analysis for validity. Finally, the third situation occurs when
We see a significant scatter in the results. In this case, it becomes necessary to evaluate
the quality of each result and reduce the results to the final value of the cost
given this quality.
Coordination of assessment results obtained by different approaches (methods) is performed more often
Total expert method. The main expert here is the appraiser himself, so
once he knows where the gross assumptions are made in the calculations, what kind of
the information is not entirely reliable and what factors were not taken into account for one or another
reasons. The appraiser's critical view of the results of his own work helps to approach
reliable final result by calculating the weighted average value of the cost.
To obtain a weighted average total value of the cost, it is necessary first of all
establish criteria by which the results of different approaches (methods) are compared and
conclusions are drawn about their preference. There is a fairly large set of methods
expert assessments used for different purposes and described in the literature (paired comparisons,
sequential comparisons, prioritization, analysis
For hierarchies, preference modeling, etc.)1. We will focus on the simplest method,
using a ranking procedure.
Ranking is the location of the evaluation results obtained by different approaches (methods),
in ascending order of quality. To do this, it is first necessary to formulate the criteria
qualities by which evaluation results obtained by different approaches will be compared
(methods). Moreover, it is not the approaches (methods) as such that are subject to comparison, but the results of their
use. We single out five main criteria for the quality of evaluation results, approximately
equal in importance:
Compliance with the estimated using this approach value of the purpose of the assessment;
Predominance of raw data from reliable sources;
The predominance of strict formalized procedures over intuitive estimates and assumptions;
The degree of closeness of the result to the actual market value at the time of valuation;
Using duplicate information from different sources to validate results
calculation.
As an example, let's take the results of estimating the cost of a vertical drilling machine,
obtained by three approaches (methods), and we will rank these results by three
the above criteria (Table 6.11).
In table. 6.11 expertly according to the criteria for each result obtained by one or another approach,
assigned their standardized rank. The order of its calculation is as follows: if two results
are equivalent and share the corresponding places among themselves, then their rank is equal to the average value of these
places. For example, for the first criterion, the results for the comparative and income approaches
equal and share first and second place, so their standardized rank
equals (1 + 2)/ 2=1.5. According to the fourth criterion, the results of costly and
income approaches, they are tied for second and third place, their standardized rank
equals (2 + 3)/ 2 = 2.5. Next, we calculate the total standardized ranks for each
Table 6.11
Ranking of cost estimation results obtained by different
Approaches
|
Quality criterion |
The result obtained by the comparative approach |
The result obtained by the cost approach |
The result obtained by the income approach |
|
|
1. Correspondence of the value estimated using this approach to the purpose of the assessment |
||||
|
2. Predominance of raw data from reliable sources |
||||
|
3. The predominance of strict formalized procedures over intuitive estimates and |
||||
|
4. The degree of closeness of the result to the actual market value at the time |
||||
|
5. Use of duplicate information from different sources for confirmation |
||||
|
Total rank |
||||
|
Weight factor |
Dogo approach. In the right column of the table 6.11 line-by-line totals were calculated for the purpose of control
calculations, they must be equal to the sum of the places, i.e. 1 + 2 + 3 = 6.
Standard ranks are converted into weight coefficients:
Where I>!
Rjj- the sum of the standard ranks for all criteria and
approaches; R,
- total rank of the result obtained by the i-th approach.
In our example, the results of the comparative, cost and income approaches are
weight coefficients 0.41; 0.31 and 0.28, respectively. Weighted average total
cost of a vertical drilling machine: 32590x0.41 + + 36930 x 0.31 + 26420 x 0.28 = 32208
* 32210 rub.
Accuracy analysis of the results of evaluation performed by different approaches (methods) opens
the possibility of reconciling these results on a fairly objective basis. After all, it is
accuracy is the main criterion for the quality of the assessment.
Accuracy analysis for each assessment approach allows you to get a confidence interval, in
which, with a high degree of probability, the desired value can be found.
The total value of the cost according to all three estimates, obviously, should be in the
range that will be common to all three confidence intervals corresponding to the three
assessment approaches. This is the interval method of reducing completed estimates to one
value or to a very narrow range of values.
We will show the application of the interval method in assessing the market value
vertical drilling machine. Indicators of accuracy analysis of intermediate results,
obtained by different approaches are summarized in Table. 6.12.
Comparison of three confidence intervals is shown in fig. 6.3. From the graph in Fig. 6.3
it can be seen that all considered confidence intervals have a common interval from 30874 to 31459
rub. Therefore, the final value of the cost corresponds to the middle of this interval, i.e.
e. it is equal to (30874 + 31459) / 2 = = 31166 rubles. This is slightly less than the average
cost value equal to 31980 rubles.
Another method for interpreting the results of precision analysis is to build in
simplified form of the summary distribution curve (sum curve method
distribution).
Table 6.12
Indicators of Accuracy Analysis of Intermediate Evaluation Results
The cost of a vertical drilling machine obtained by different approaches
Cost approach
Rice. 6.3. Obtaining the final cost by the interval method
It is assumed that the obtained confidence intervals correspond to the conditions of the normal
distributions, i.e. their width corresponds to the plus or minus two sigma (±2a) rule. Such
distribution can be simplified as a trapezoid, the lower base of which is equal to
the width of the confidence interval, i.e. "four sigma", and the upper base is "2/3 sigma",
or 1/6 confidence interval. The area of the trapezoid is equal to -
Noah 100%, then its height is equal to 42.86 / a or 171.43 / CI, where CI is the width of the confidence
interval.
Based on the above ratios, a trapezoid is built over each confidence interval,
approximately describing the line of normal distribution.
The final cost estimate is considered as the result of an aggregate sample representing
is a mixture of three samples obtained by each approach, the distribution of which is close to
normal. The distribution for the aggregate sample can be plotted graphically as a broken line
a line whose ordinates are equal to the sum of the ordinates of three trapezoids. Thus, we get
approximate representation of the distribution curve that combines the results of cost calculations
three approaches (methods).
The final value of the cost can be found by the mode (i.e. top) of the polyline.
Applying the Cumulative Distribution Curve Method to Estimating Cost
vertical drilling machine is shown in fig. 6.4.
Considering the total distribution curve in fig. 6.4, two conclusions can be drawn.
Firstly, the top of the broken line corresponds to the cost of the machine about 33,400 rubles. This
value can be taken as the final value of the estimated value, integrating the results
evaluation by three approaches.
Secondly, the mixture of three distributions is not strictly unimodal, since we observe not
one, but two vertices or modes. Another, less pronounced peak is created by the distribution from
valuation by the income approach, which gives reason to believe that the results of the valuation
approach are not statistically homogeneous with respect to the results obtained
comparative and cost approaches.
In this example, when summing up the assessment, the weighting of the income approach is the least,
and the final value is formed mainly on the basis of the results of the assessment of comparative and
cost approaches, as evidenced by estimates of the total cost obtained by the method
expert ranking (32210 rubles) and the method of the total distribution curve (33400 rubles).
The purpose of harmonizing the results obtained using the methods used is to identify, within the framework of the problem being solved, the advantages and disadvantages of each of them, and thus, to determine a single cost estimate. The advantages (disadvantages) of each method in assessing the value of an object are determined by the following criteria:
- 1. Ability to reflect real intentions potential buyer or seller.
- 2. The quality and breadth of the initial information on the basis of which the analysis is carried out.
- 3. The ability of the methods used to take into account market fluctuations and the cost of funds.
- 4. The ability to take into account the specific characteristics of the object of assessment.
The process of summarizing the results obtained by different approaches leads, taking into account additional adjustments, to the establishment of the final cost, which achieves the goal of the assessment.
The weighted average total cost is calculated using the formula
S P = V Wed S Wed +V zat S zat +V doh S doh , where
S cf, S zat, S doh - the cost of the object - obtained using the comparative, cost and income approaches, respectively;
V av, V zat, V doh - the weighting factor of the result obtained using the comparative, cost and income approaches, respectively, and
V cf + V zat + V doh \u003d 1
In this work, the ranking procedure (hierarchy analysis method) was used. Ranking is the arrangement of the evaluation results obtained using different approaches (methods), in ascending order of their quality. For ranking, first of all, it is necessary to formulate quality criteria by which the evaluation results will be compared using different approaches (methods).
Moreover, it is not approaches (methods) as such that are subject to comparison, but the results of using these approaches (methods).
Quality criteria are formulated for all three approaches.
It is important to note that it is simply impossible to avoid subjectivity in the reconciliation of results, as well as throughout the entire evaluation process. It is only possible with the help of some methods, techniques, procedures to try to reduce the degree of subjectivity, including when coordinating the results.
The appraiser chose a system of four factors. For each factor, each of the methods used is assigned:
- 0 points - if this method does not meet the criteria of this factor at all;
- 1 point - if this method satisfies the criteria of this factor to the extent that the Appraiser may consider insufficient, below average, worse than usual, not quite sufficient for ordinary confidence in the result of this method;
- 2 points - if this method satisfies the criteria of this factor to the extent that the Assessor can consider quite acceptable, average, normal, sufficient for ordinary confidence in the result of this method;
- 3 points - if this method completely satisfies the criteria of this factor.
- 1. Compliance with the type of calculated cost:
It is assumed that the comparative approach always corresponds to the market value - 3 points.
The cost approach in non-construction markets is not real alternative purchase of objects already available in a sufficient number.
The weight of the cost approach for this criterion is 2 points.
2. Reliability and sufficiency:
In a comparative approach, the Valuer has analyzed a sufficient amount of market data. These data, based on the sources of their receipt, were quite reliable. Taking this into account, 3 points were set for the results for this factor.
The cost approach for objects in the conditions of the predominance of supply over demand is significantly less reliable compared to the other two approaches.
As a result, the weight of the cost approach for this criterion is 3 points.
3. Ability to consider pricing factors:
In valuation theory, it is believed that the comparative approach fully reflects the structure of pricing factors. Considering that we assessed the reliability of the market data themselves earlier, within the framework of this factor it is necessary to evaluate only the fundamental property of the approach to reflect the market. Therefore, the comparative approach was given a weight of 3 points.
In the period when supply prevails over demand, the cost approach reflects the structure of market pricing factors to a much lesser extent, the weight is 2 points.
4. Ability to consider motivation:
The comparative approach is the most obvious benchmark for market participants - 3 points.
The cost benchmark in the limited volume of actually ongoing construction is not quite adequate in terms of taking into account the motivation for the price of objects -2 points.
Table 5
RESULTS OF GENERALIZING THE FINAL COST OF THE OBJECT OF ASSESSMENT AND AGREEING THE RESULTS OF CALCULATIONS
|
Comparative |
costly |
Profitable |
||
|
The result of the calculation, rub. |
Not used |
|||
|
Application of the approach in calculations |
||||
|
Reliability and sufficiency of information on the basis of which the analysis and calculations were carried out |
||||
|
The ability of the approach to take into account the structure of pricing factors specific to the object |
||||
|
The ability of the approach to reflect the motivation, actual intentions of the typical buyer/seller |
||||
|
Compliance of the approach with the type of calculated cost |
||||
|
Total rank |
||||
|
Weight coefficient, % |
||||
|
Weight of the calculation results of the corresponding valuation method, rub. |
||||
|
Agreed value of the market value of the appraisal object, rub., incl. VAT |
As a result of the analysis and calculations using existing valuation methods, the Appraiser determined the final value of the market value of the VAZ 21213 car, which, after rounding, amounted to:
58000 (Fifty eight thousand) rubles
Conclusion: the total value is within the market range defined for the appraisal object in the Market Analysis Section.
Appraiser's judgment about the possible boundaries of the interval in which, in his opinion, the market value may be.
The assessment of the market value, no matter how accurate and reliable methods it is obtained, always contains some uncertainty (fuzziness, ambiguity) and cannot be considered as the exact value of the market value. In most cases, in practice, the appraiser operates with a certain sample of market prices, without having information about the entire volume of offers (especially transactions). In these cases, the "true" value of the market value (that is, the value of the population statistic we have chosen) cannot be determined because the population of prices is not available for analysis. It is in such situations that the problem arises of estimating the value of the statistics of the general population based on a sample of its representatives (that is, part of this population). And this task does not exact solution. It is impossible to determine the "exact" value of the mathematical expectation as the average value for the entire general population without analyzing this population. It is in this sense that market value in most practical tasks unobservable on the market.
From the point of view of mathematical statistics, the cost, as a random variable, is calculated on the basis of the values of the prices of analogous objects xi, i=1,…,n, understood as n of its independent observations. The general population is the prices of all objects in the market segment under consideration, and the value of the appraisal object is obtained as a result of processing a sample of values available to the appraiser from the general population.
The theory and practice of estimation in most cases use its mathematical expectation as an indicator of RS, the estimate of which is obtained by calculating the sample mean, usually accompanying it with an estimate of accuracy in the form of confidence interval boundaries. However, the definition of RS mentioned above speaks of the most probable value, which in the general case corresponds to another statistic of a random variable - the mode. And only for symmetric unimodal distributions of random variables, which, in particular, is the normal distribution, the values of the mathematical expectation and the mode coincide.
At the same time, the procedure for selection by the appraiser of analogues of the object being evaluated is not, strictly speaking, a procedure for random selection from the general population and cannot guarantee the homogeneity of the sample. It is also impossible to exclude the possibility of appraiser's errors in the formation of a sample of market data on the prices of objects-analogues. Taking this into account, it should be recognized that the hypothesis of the normal distribution of a sample of market data cannot be considered as accepted automatically, which means that it must be tested.
Confirmation of the hypothesis of normal distribution of sample data on the prices of analogues is also required for the correct application of correlation-regression methods in determining the value of the object of assessment, taking into account its differences from analogues in one or more influencing characteristics. It is known that the presence of optimal properties of the least squares method used in the construction of regression dependencies is closely related to the normal distribution of the resulting parameter (sample of market prices) and the absence of gross errors in the sample. Another condition for ensuring the correctness of the constructed regression is the normality of the distribution of errors, which must be checked at the final stage of the regression analysis.
To check the sample of analogues for compliance with the conditions of normal distribution and homogeneity, the coefficients of variation and oscillation, the skewness coefficient, the kurtosis coefficient, the standard error of the skewness and the standard error of the kurtosis were calculated, and the sample was also checked for the absence of outliers.
The coefficient of variation V characterizes the relative measure of the deviation of the measured values from the arithmetic mean:
V = H 100%, where
V - coefficient of variation;
y - standard deviation (function STDEV);
a - arithmetic mean (AVERAGE function).
The greater the value of the coefficient of variation, the relatively greater the scatter and the lower evenness of the studied values. If the coefficient of variation is less than 10%, then the variability of the variation series is considered to be insignificant, from 10% to 20% refers to the average, more than 20% and less than 33% to significant, and if the coefficient of variation exceeds 33%, then this indicates the heterogeneity of information and the need excluding the largest and smallest values.
Checking the sample for the absence of outliers was carried out during the evaluation process. According to the results of calculations by a comparative campaign, the coefficient of variation is within 24.69%
Conclusion: The possible boundaries of the interval in which the market value can be located can be within + - 24.69% of the market value determined by calculation.
As a result of studying this chapter, the student should:
know
Various methods of carrying out the procedure for agreeing on the results of the assessment, criteria for determining weighting factors;
be able to
Professionally carry out the procedure for coordinating the results of the assessment obtained by different methods;
own
Techniques for conducting the approval procedure in practice.
The approval procedure is the final stage of the assessment
After the appraiser has chosen various methods of several classical approaches and applied them in business valuation, it becomes necessary to analyze and agree on the results obtained when they are applied. Thus, in order to obtain a final conclusion, the question arises of deriving the final value of the business value (or the range of its values).
In paragraph 8 of section. III "Requirements for the content of the assessment report" FSO No. 3 states that, regardless of the type of the object of assessment, the assessment report should contain a section "Agreement of results".
Since there is always some scatter in the numerical values of the values determined by different approaches, the task of the appraiser is to explain this scatter by analyzing its causes. If any of the approaches was not used, then the reason for this should be explained.
Coordination of the results obtained by different methods of applied approaches is the final stage of the assessment. This part of the report is called “Agreement”. In it, the appraiser, in narrative form, sets out the final opinion on the appraised value that was determined in the Valuation Assignment.
Material facts that were considered and analyzed in the report should be summarized in this section.
Here the appraiser must weigh acceptability of the cost concept(or several concepts), i.e. to what extent it is suitable for the object being assessed. The key to a competent end result is a comprehensive re-examination that questions the underlying assumptions, methods, information, and calculations of each procedure applied. During the reconciliation, the appraiser checks once again that the market data used are confirmed in the report with references to information sources.
The final appraised value is never the result of averaging, i.e. it cannot be obtained by summing up all estimated values obtained using different valuation approaches and then dividing this sum by the number of approaches used. Averaging the results of different methods does not guarantee the correct conclusion about the assessment, since in this case it is assumed that when performing the assessment, each approach gave an equally reliable result, which is extremely rare in practice. It is rather the result appraiser's professional judgment on the final value of the estimated value, which he considers logical and reasonable and which is based on the application of various valuation concepts. The most preferable option for carrying out the procedure for coordinating the results obtained in order to obtain the final value of the value of the enterprise being valued in accordance with the task assigned to the appraiser is considered to be weighted average.
Thus, "various methods may be used in the valuation process, but the decision on the relative importance of the value indicators obtained on the basis of various methods should be determined by the appraiser's reasonable judgment, which is formalized by weighing the costs, calculated by all methods used. The solution of the question, which valuations to give more weight and how to weigh each method in relation to others is the key to final stage ratings".
In an ideal (open and competitive) market, all three classical approaches should lead to the same value. However, most markets are imperfect, supply and demand are not in balance. Potential users may be misinformed, manufacturers may be inefficient. For these and other reasons, these approaches can give different indicators of value, which the appraiser compares with each other, conducting the approval procedure.
For determining specific gravity(in percentages or fractions of a unit) for each result of applying the method of each assessment approach, it is necessary to conduct a quantitative and qualitative analysis that takes into account the following factors:
- the purpose of the assessment and the intended use of its results;
- the applied type (standard) of value (for example, reasonable market value or investment value);
- the nature of the ownership interest being assessed (for example, if a minority stake in a company is being assessed, it would be inappropriate to place heavy weight on the Ownership approach);
- the quantity and quality of data supporting the method;
- the nature of the business and its assets;
- the level of control of the ownership interest in question;
- its liquidity level.
Taking into account all these factors makes it possible to weigh and ultimately draw a final conclusion.
I would like to emphasize once again that the value of the business indicated as a result in the report is opinion of an independent appraiser and no more. The buyer has every right to disagree with this opinion and offer his own price during the negotiation process. Thus, the price of the transaction may differ quite seriously from the value determined by the appraiser in the report. There can be many reasons for this: for example, the price may depend on the goals facing the buyer, his subjective motivations, and the characteristics of the transaction.
In the West, as a rule, the estimated value of the company differs slightly from the price of the transaction. In Russian reality, this discrepancy is often more than 30%. Nevertheless, a competent and calculated conclusion of an appraiser who has good reputation, can become an additional argument in negotiations with a potential buyer.
So, the purpose of reconciling the results is to determine the value of the property being valued and the ownership rights to it as of the valuation date by analyzing the features of the approaches and methods by which the calculations were made. The problem of formalizing the procedure for coordinating the results of assessing the market value of a business obtained using various approaches can be solved both in the traditional way using the expert method and by considering the coordination procedure as a multi-criteria decision-making problem.
- Business valuation: textbook / ed. A. G. Gryaznova, M. A. Fedotova. P. 376. However, in the original material of the IBRD seminars, prepared by the company Deloitte & touches, read: "There are two basic method weighing: mathematical weighing method; subjective weighing method. Mathematical weighting method uses percentage weighting... When subjective weighing the goal is the same as with the mathematical weighting method - to reach a single estimated value, but this approach does not use percentage weighting. The evaluation conclusion is based on an analysis of the advantages and disadvantages of each method, as well as an analysis of the quantity and quality of data in the rationale for each method. At the forefront are the professional experience and judgments of the appraiser" (p. 377). In our opinion, it is methodologically incorrect to single out these two methods of weighing - mathematical and subjective - as various, since, in fact, the method of weighing in both cases identical and they are, in fact, no different from each other. There is no fundamental difference in the form in which the weighting coefficients are set - in percentages or fractions of a unit. It is only important to control that in total they give either 100% or one, which is not understood by all appraisers.
- See: Ibid.
The final stage of the assessment is the coordination of the results obtained by various methods within the framework of the approaches used. The purpose of such an agreement is to obtain the final final value of the cost.
The three approaches to valuation are independent of each other, although each is based on the same economic principles. In an ideal (open and competitive) market, all three approaches should result in the same value. However, most markets are imperfect, supply and demand are not in balance. Potential users may be misinformed, manufacturers may be inefficient. For these and other reasons, approaches can give different indicators of value, which the appraiser compares with each other during the approval procedure.
As stated in the Federal Valuation Standards (FSO No. 1), the method of coordination chosen by the appraiser, as well as all judgments, assumptions and information used by the appraiser in the process of reconciling the results, must be justified.
Weighted averaging is considered to be the most preferred option for carrying out the procedure for reconciling the results obtained in order to obtain the final value of the cost. The appraiser weighs to what extent one or another approach corresponds to the purpose of assessing the object under consideration, whether the calculations are supported by market data, whether they contradict them, and in the final conclusion, he relies more on the value indicator that was obtained on the basis of the most ideal of all points of view of the approach. In other words, in order to agree on a weighing procedure, the evaluator must justify the choice of weights used.
In the event of a significant discrepancy in the results of the appraisal of the appraisal obtained using different approaches, the appraiser must provide an analysis of the causes of the discrepancy in the appraisal report.
The appraiser determines the relative importance, applicability, and validity of each value measure based on criteria such as adequacy, quality of information, accuracy of the estimate, and amount of evidence.
The weighted average market value (PC) of the subject property is calculated using the formula:
RS = SP ´r1 + SP ´r2 + DP ´r3 , where:
Example table:
| No. p / p | Name of indicator | Cost approach | Comparative approach | income approach |
| 1 | Applicability of the approach to the assessment of the object in accordance with the principles and standards of assessment that have been established in Russia and the world | 10 | 60 | 30 |
| 2 | Adequacy, reliability and sufficiency of information on the basis of which the analysis and calculations were made | 15 | 70 | 15 |
| 3 | The ability of the approach to reflect the motivations, actual intentions of typical market participants, and other realities of supply and demand in the market | 10 | 50 | 40 |
| 4 | Effectiveness of the approach in relation to accounting for the conjuncture and dynamics of the financial and investment market (including risks) | 10 | 60 | 30 |
| 5 | Assumptions made in evaluating each approach | 10 | 70 | 20 |
| Sum of points | 55 | 310 | 135 | |
| Weighted averages of the scoring method (Sum of points / n) | 0,11 | 0,62 | 0,27 | |
| Accepted weighting factors: | 0,11 | 0,62 | 0,27 |
Peculiarities of evaluation in bankruptcy proceedings. Assessment report.
The situation of bankruptcy and liquidation of an enterprise is an emergency. The probability of a positive solution to the problem of non-payment depends on the value of the property. Estimating the value of an enterprise is necessary not only in case of liquidation, but also in other cases of working with an insolvent enterprise:
– when financing an enterprise-debtor;
– when financing the reorganization of an enterprise;
– in case of enterprise reorganization carried out without trial;
- when developing a plan for repaying the debts of the debtor enterprise;
– when analyzing and identifying the possibilities of highlighting individual production capacity in economically independent divisions;
– when evaluating applications for the purchase of an enterprise;
– in the examination of fraudulent transactions for the transfer of property rights to third parties;
– during the examination of enterprise reorganization programs.
According to the Law of the Russian Federation "On Insolvency (Bankruptcy)" dated October 26, 2002 No. 127-FZ, an enterprise can be assessed at the stage external management(Article 109 “Measures to restore the debtor’s solvency”: when selling part of the debtor’s property and selling the entire enterprise of the debtor, Article 110 “Sale of the debtor’s enterprise” and Article 111 “Sale of part of the debtor’s property”: the initial sale price of the property put up for auction is set on the basis of the market value of the property determined by an independent appraiser), at the stage of bankruptcy proceedings (Article 130 “Valuation of the debtor’s property”), it is assumed that during the bankruptcy proceedings the bankruptcy trustee makes an inventory and valuation of the debtor’s property. To do this, he attracts independent appraisers and other specialists with payment for their services at the expense of the debtor's property, unless another source is established by the meeting of creditors.
Debtor's property unitary enterprise or debtor joint-stock company, more than 25% of the voting shares of which are in state or municipal ownership, is evaluated by an independent appraiser with the presentation of the conclusion of the state financial control body on the evaluation.
An appraisal of the debtor's movable property, the book value of which as of the last reporting date preceding the debtor's bankruptcy is less than one hundred thousand rubles, may be carried out without the involvement of an independent appraiser by decision of the meeting of creditors.
When forming the bankruptcy estate, Art. 131 the predominant part of the debtor's property is subject to valuation, the property that is the subject of pledge is taken into account and evaluated separately. The price of socially significant objects under Art. 132 is also determined by an independent appraiser.
In bankruptcy proceedings, the initial sale price of the debtor's property put up for auction under Art. 139 "Sale of the debtor's property" is established by an independent appraiser.
Evaluation procedures in case of assignment of the debtor's rights of claim and replacement of the debtor's assets in the course of bankruptcy proceedings, it is carried out in the same way as in external management, in accordance with Art. 111 and 115, that is, with the involvement of an independent appraiser.
Valuation in a bankruptcy situation has a number of features due to the extraordinary nature of the situation itself. Based on this assessment, many stakeholders certain managerial decisions and actions are taken. Another feature of the evaluation is the high degree of dependence of third parties on the results of the evaluation. In a bankruptcy situation, the customers and users of the assessment are different persons. The users of the appraisal are creditors, investors, judicial authorities who had no relation to setting the task for the appraisal and who fully rely on the results of the appraisal when making management decisions. They do not have constant contact with the expert appraiser, not knowing the terms of the assignment for the assessment, they can negatively interpret the results of the assessment performed by the expert appraiser. Knowing this, the parties interested in the valuation need to obtain appropriate explanations from the customer of the valuation (for example, an external manager) or from the expert appraiser himself regarding the fundamental parameters for assessing the liquidation value of an enterprise: the purpose of the valuation, the function of the valuation, the type of value that was determined, limitations and assumptions in the valuation, the date of the valuation, etc.
External management implies the restructuring of almost all factors of production of the debtor enterprise (labor, real estate, capital and management); introduction of a moratorium on satisfaction of creditors' claims; restoration of solvency due to re-profiling of production, liquidation of accounts receivable, sale of part of assets, sale of business, etc.
According to Art. 109 of Law No. 127-FZ “On Insolvency (Bankruptcy)”, the external receivers take measures to restore the debtor’s solvency, draw up an external management plan, and develop measures to restore solvency:
- production is re-profiled: unprofitable production is closed;
- sale of property;
- the assignment of the rights of the debtor's claim is carried out;
– placement of additional ordinary shares of the debtor is carried out;
– the debtor's enterprise is sold;
- replacement of the debtor's assets, etc.
All of them involve the procedure for assessing property, property rights, shares, etc. in one form or another.
According to Art. 110 "Sale of the debtor's enterprise" under the debtor's enterprise is understood a property complex intended for the implementation entrepreneurial activity. The object of sale may be branches and other structural units debtor - legal entities. The initial sale price of an enterprise put up for sale (open or closed or auction) is set on the basis of the market value of the property, determined in accordance with the report of an independent appraiser engaged by an external manager. At the same time, the initial sale price of the enterprise cannot be lower than minimum price sale of the enterprise determined by the debtor's management bodies.
In accordance with Art. 111 "Sale of part of the property" the initial sale price of the property put up for auction is set on the basis of the market value of the property according to the report of an independent appraiser engaged by an external manager. The property of a debtor - a unitary enterprise or a debtor - a joint-stock company, more than twenty-five percent of the voting shares of which are in state or municipal ownership, is also evaluated by an independent appraiser, but at the same time, an examination of the appraiser's report by the state financial control body is expected with the presentation of its opinion on the assessment.
Examination of the assessment report- this is a set of measures to verify compliance by the appraiser when assessing the requirements of the legislation of the Russian Federation on appraisal activities and the appraisal agreement, as well as the sufficiency and reliability of the information used, the validity of the assumptions made by the appraiser, the use or refusal to use approaches to appraisal.
If the external administration plan assumes the assignment of the debtor's right to claim (Article 112), then an assessment of the rights of claim is necessary and it is carried out in accordance with the provisions of Art. 111 of this law.
As you know, the issue of new shares is the most important way to attract additional partner capital, this measure to restore solvency is regulated by Art. 114. When a decision to issue additional ordinary shares of the debtor is included in the external management plan, it is necessary to check: what is the ratio of the book value and appraised value equity issuing company. If the estimated value of the enterprise is greater than that based on the residual book value of assets, liabilities and profits, then the issue of shares is carried out by the amount of this excess. If the estimated value of the issuer's own capital is less than the book value of this capital, then the issue of shares is not allowed, and the joint-stock company must declare a decrease in the amount of the authorized capital of the enterprise in the balance sheet by the same difference.
The replacement of the debtor's assets (Article 115), as one of the ways to combat the debtor's insolvency, involves the creation of one or more open joint-stock companies on the basis of the debtor's property, in payment for the authorized capital of which the debtor's property, determined by the external management plan, is contributed. The amount of the authorized capital of such companies is determined on the basis of the market value of the contributed property, established according to the report of an independent appraiser, taking into account the proposals of the debtor's body.
Sanitation of bankrupt enterprises involves their financial recovery, aimed at raising the price at which these enterprises can be sold. The task of business valuation in relation to reorganization is changing. It consists in forecasting the estimated value of the enterprise after the planned set of rehabilitation measures is completed, that is, in forecasting the future reasonable market value and investment value of the enterprise. This cost will be multi-variant, depending on which specific remedial measures are approved.
The appraisal report submitted to the meeting of creditors by the external manager should not only state the value of the enterprise at the moment, but also the alternatives: sell the enterprise at its current, usually very low cost, or agree to a longer recovery period, based on the proposed plan and predictive estimates of the increase in the value of the enterprise after the proposed procedures.
Valuation report is a document containing the justification of the appraiser's opinion on the value of the property.
General requirements for the content of the appraisal report of the appraisal object are formulated in Article 11 of Law No. 135-FZ.
The appraisal report of the object of appraisal (hereinafter referred to as the report) must not be ambiguous or misleading. The report must indicate the date of the appraisal of the appraisal, the appraisal standards used, the goals and objectives of appraising the appraisal, as well as other information that is necessary for a complete and unambiguous interpretation of the results of the appraisal of the appraisal reflected in the report.
If during the appraisal of the appraisal object, not the market value is determined, but other types of value, the report must indicate the criteria for establishing the appraisal of the appraisal object and the reasons for the deviation from the possibility of determining the market value of the appraisal object.
The report must include:
Date of compilation and serial number of the report;
The basis for the appraiser to evaluate the object of appraisal;
Location of the appraiser and information about the appraiser's membership in a self-regulatory organization of appraisers;
Exact description of the appraisal object, and in relation to the appraisal object owned by a legal entity - details legal entity and book value of the subject property;
Appraisal standards for determining the appropriate type of value of the appraisal object, the rationale for their use in the appraisal of this appraisal object, the list of data used in the appraisal of the appraisal object, indicating the sources of their receipt, as well as the assumptions made during the appraisal of the appraisal object;
The sequence of determining the value of the object of assessment and its final value, as well as the limitations and limits of the application of the result obtained;
Date of determining the value of the appraisal object;
List of documents used by the appraiser and establishing quantitative and quality characteristics object of evaluation.
The report may also contain other information that, in the opinion of the appraiser, is essential for the completeness of the reflection of the method used by him to calculate the value of a particular object of appraisal.
Article 11, as its name implies, establishes only General requirements to the content of the appraisal report of the appraisal object, therefore, in part 6 of article 11 it is stipulated that in order to conduct an appraisal certain types objects of assessment by legislation Russian Federation special forms of reports can be established.
The report must be page numbered, stitched, signed by the appraiser or appraisers who performed the appraisal, and also sealed with the personal seal of the appraiser or the seal of the legal entity with which the appraiser or appraisers have entered into an employment contract.
Art. 12 of the Law defines such a concept as the reliability of the report as a document containing information of probative value.
The final value of the market or other value of the appraisal object indicated in the report drawn up on the grounds and in the manner provided for by this federal law, is recognized as reliable and recommended for the purposes of making a transaction with the subject of assessment, if in the manner prescribed by the legislation of the Russian Federation, or in judicial order not otherwise established.
In FSO No. 1 " General concepts valuation, approaches and requirements for the valuation” clause 19, it is stated that when compiling the valuation report, the appraiser is obliged to use information that ensures the reliability of the valuation report as a document containing information of probative value. Information must meet the requirements of both reliability and sufficiency.
In development of Article 20 of Law No. 135-FZ approved by the Federal Security Service No. 3 "Requirements for an assessment report"
This federal valuation standard establishes requirements for the preparation and content of the valuation report, information used in the valuation report, as well as for the description in the valuation report of the methodology and calculations used. The evaluation report is drawn up following the results of the evaluation.
The appraisal report is a document drawn up in accordance with the legislation of the Russian Federation on appraisal activities, this federal appraisal standard, the standards and rules for appraisal activities established by self-regulatory organization appraisers, a member of which is the appraiser who prepared the report intended for the customer of the appraisal and other stakeholders(users of the evaluation report) containing a confirmed based on collected information and calculations professional judgment of the appraiser regarding the value of the appraised object.
Examination procedure valuation reports and preparation of opinions on valuation reports of the debtor's enterprise - a unitary enterprise or the debtor's property - a joint-stock company, more than twenty-five percent of the voting shares of which are in state or municipal ownership, authorized by the Government of the Russian Federation.
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