Valuation has long been deemed as highly technical practice exclusively left to external valuation firms. However, it has increasingly been becoming a matter of management responsibility in view of maintaining fairness among parties in reorganization or M&A transactions. For example, “the guideline for fair M&A transactions” recently published by the Ministry of Economy, Trade and Industry (METI) suggests that in addition to the formality of special committee and third party valuation firms, obtaining independent opinions on fair value from independent financial advisers or external valuation firms is desirable to ensure fairness of transaction. Under the new norms, management or special committee may be responsible in their own capacity to understand the major valuation issues and ensure the fairness of transaction price. Our experts are providing following advisory services from truly independent perspectives.
- Review of valuation by the third-party valuation firm – checking reasonableness of procedures, methodology, and inputs, analysis of major issues on valuation and related risks
- Review of business plan to be used by the valuation firm in M&A or reorganization on points including feasibility, reasonableness of assumptions and data to be used, consistency with accounting standard and economic theories, and related advisory for improvement
- Building and/or reviewing financial models and related advisory services for assisting client’s decision making in M&A and project financing
- Expert advisory to management and special committee on topics on valuation in cases where strict fairness is required such as going private deals
- Expert advisory on procedures of valuation of stock to be transferred under the joint-venture contract, including advisory on selection of independent arbitrator or valuation firm, designing procedures and protocols, and negotiation with the JV partners