Merger valuation is required for determination of share swap (exchange) ratio when two companies are amalgamating with each other pursuant to orders of the Court/NCLT. In case of demerger, share entitlement ration is worked upon
Having fair valuation is essential for protection of Shareholders of each company. The same is subject to scrutiny by the minority and institutional shareholders and it also has the potential of derailing the process of merger.
In case of a Merger Valuation, the emphasis is on arriving at the relative values of the shares of the merging companies to facilitate determination of the swap ratio. Hence, the purpose is not to arrive at absolute values of the shares of the companies. Though there are no specific methodology prescribed for valuation under Merger, however In Hindustan Lever Employees Union v. Hindustan Lever Ltd and Others, Bombay High Court - “Market and Income Approach for valuation has been given of higher importance”
However recently BSE & NSE require valuers to display workings , relative fair value per share in prescribed format for all three Valuation Approaches.
Under companies act 2013, Merger Valuation can be done by a SEBI Registered Merchant Banker or independent Chartered Accountant with 10 years of Experience
Real challenge in Merger valuation is to have a balance in determination of share swap ratio that is a win-win for shareholders of both the companies. The valuation should be done on Relative basis on date of Valuation and should also factor in Synergy Value which may be adequately attributed to the Target and Acquirer Company.
We as a Merger Valuation Consultant with extensive experience and research focus help you in quantifying the fair value of both the businesses and suggest a share swap ratio for the proposed amalgamation. We do a detailed analysis of the Company and its Peer Companies. We deliver well-reasoned and defensive Merger Valuation Report. Corporate Professionals has the experience and commitment necessary to provide practical and timely Merger valuation consultancy. We are one of the best M&A Valuation Consultants in Delhi, India and have experience of advising more than 100 Merger Transactions.
