Valuation of shares is needed by companies issuing their shares to attract financing, private investors, companies carrying out mergers and acquisitions, etc. The popularity of this service will always grow along with the development of stock markets.
Purposes of stock valuation
Valuation of shares is most often carried out for the following purposes:
processing loans secured by securities;
purchase and sale, gift, exchange or inheritance of shares;
reorganization, liquidation, restructuring of the company;
transfer of shares to the authorized capital or trust management;
forced repurchase of securities from minority shareholders;
making management or investment decisions;
litigation, etc.
A high-quality independent assessment of the value of shares is possible by providing the maximum complete set of required documents, which are listed below.
Assessment methods used
The value of a block of shares can be assessed based on a number of methods, the main ones of which are those listed below.
The nominal method is based on the declared (face) value of one share, with the help of which the company is valued and large dividends .
The market valuation of shares is based on the method of the same name, which consists in analyzing the interaction between the supply of shares and the demand for them from the market. The higher the company's prospects, the more investors demand the shares and the higher their value. Conversely, an enterprise experiencing a crisis or financial difficulties will not be able to sell its shares at a high price.
Another method - the balance sheet - is based on measuring the share capital of the enterprise, equal to the ratio of the total assets of the customer to the amount of all liabilities and capital contributed by the owners of preferred shares.
The valuation of the company's shares is also carried out by the liquidation method, which consists in calculating the size of the company's assets that remain after the sale of assets at the best price after repayment of all liabilities and payment of payments to holders of preferred shares. This method is used when a company is subject to liquidation or declares bankruptcy.
Recently, due to the active development of startups and venture projects, the importance of another method by which a company’s shares are assessed has grown. The price at which, in the opinion of investors, a share should be sold on the stock market is estimated.
Required Documentation
A customer who requires an assessment of a block of shares must submit the following documents:
charter, certificate of registration, memorandum of association; prospectuses and reports on the results of the issue of shares;
organizational structure of the enterprise;
statement of fixed assets;
information about available assets - bills of exchange, real estate, intangible assets, inventories, etc.
Also required are complete financial statements for the last few years, the results of the latest audit, information about existing debts (receivables and payables), as well as information about existing subsidiaries (if any). The more detailed the documents presented, the more accurate the assessment of the value of the company's shares.
