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EBVS EUROPEAN BUSINESS VALUATION STANDARDS

Explore the comprehensive European Business Valuation Standards introduced by EBVSC to improve the valuation process, including market value, valuation approaches, and reporting guidelines.

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EBVS EUROPEAN BUSINESS VALUATION STANDARDS

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  1. EBVSEUROPEAN BUSINESS VALUATION STANDARDS Sophia, 12th October 2019 Danijela Ilic FRICS, REV Chair of EBVSC

  2. EBVSC Following the Athens GA in October 2018, the TEGoVA Board has decided to set up an EBVS Committee and technical sub group to work together with the technical writer on EBVS; 18 January 2019 –first meeting of the sub group in Belgrade 30 April 2019 – EBVSC first draft sent to all EBVSC members 17 May 2019 – first meeting of EBVSC in Dubrovnik 9 August 2019 – second meeting of EBVSC in Brussels 3 September – draft EBVS sent to EBVSC 12 September 2019 – draft EBVS for the TEGoVA General Assembly

  3. Draft EBVS Introduction EBVS Definitions PART 1 – EUROPEAN BUSINESS VALUATION STANDARDS EBVS 1 Market Value and Bases of Value Other than Market Value EBVS 2 The Valuation Process EVBS 3 The Valuation Approaches and Methods EVBS 4 Reporting the Valuation PART 2 – EUROPEAN BUSINESS VALUATION GUIDANCE NOTES EBVGN 1 – Control Premiums and Discounts for Lack of Control, Discounts for Lack of Marketability EBVGN 2- Discount rates in Discounted Cash Flow Method EBVGN 3 - Valuation of Intangible Assets EC 1 European Business Valuers’ Code of Conduct PART 3 – EUROPEAN UNION LEGISLATION AND BUSINESS VALUATION .

  4. Some highlights PART 3 – EUROPEAN UNION LEGISLATION AND BUSINESS VALUATION The Board of TEGoVA does not want this important original work to be seen until the launch Definition of business: follows the new definition of a Business in Amendments to IFRS 3, adopted by Commission Regulation (EC) No 1126/2008) Definition of enterprise, company, participating interest follows definitions from relevant EU regulation EBVS 1 Definition of market value: the estimated amount for which the business should exchange on the date of valuation, in a transaction between a willing buyer and a willing seller, acting independently of each other after proper marketing, wherein the parties had each acted knowledgeably, prudently and without being under compulsion.

  5. Some highlights EBVS 1 provides application of highest and best use in business valuation: The highest and best use principle requires the valuer to calculate the Liquidation Value of the business in order to ascertain whether or not it would constitute a better option to keep the business in operation. If relevant, the result of the highest and best use analysis serves as criteria if business is going to be valued under “going concern” scenario or under “liquidation” scenario” and applying it should not be mandatory. EBVS 2- Valuation process Terms of engagement: Failure to issue written terms will result in non-compliance with EBVS and the requirements of EBVS 5 - Valuers’ Code of Ethics and Conduct. EBVS provides detailed table of minimum terms of engagement

  6. Some highlights EBVS 4 – Valuation Approaches and methods Market (Comparison) Approach, the valuation is produced by comparing the subject business with the evidence obtained from market transactions related to similar companies. The Market Approach includes two methods - the Comparable Transactions Method and Comparable Publicly Traded Companies method. Income Approach is used to describe any valuation method whereby the value of the business is determined by capitalising or discounting the estimated future economic benefits to be derived from the business. Asset based Approach, provides an indication of value based on the valuation of all assets and liabilities of the business as at valuation date.

  7. Some highlights EBVS 4- Reporting the Valuation Minimum content of the valuation report The logic behind the reconciliation of the various valuation estimates using more than one valuation approach to a single value must be stated The final value conclusion (assumptions, special assumptions, limitations on investigations and information, date of valuation, purpose and basis of value) Statement that Client accepts the first draft of the valuation report Valuation report must be signed and dated by a valuer who conducted the valuation and by a representative of the valuer's company. Valuation review

  8. Discussion is now open! Thank you

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