Services
Business Valuation
We estimate the economic value of businesses and business divisions, identifying value-creating and value-destroying segments.
Potential value is the amount of economic benefit that a business can generate in the future, based on its current performance, growth prospects, competitive advantages, and market opportunities. Knowing the potential value of a business is important for several reasons:
- It helps owners and managers to make informed decisions about investing, divesting, or acquiring businesses.
- It enables shareholders and investors to assess the return on their capital and the risk of their investments.
- It facilitates mergers and acquisitions, as it provides a common basis for negotiating the price and terms of the deal.
- It supports litigation and dispute resolution, as it provides an objective and credible measure of damages or losses.
- It enhances corporate governance and transparency, as it reveals the sources and drivers of value creation and destruction.
Therefore, our corporate value consulting services aim to help you estimate and communicate the potential value of your business, using rigorous and reliable methods and tools.
Strategic Planning
Our strategic planning services align with your shareholder value expectations. We work with management and the board to develop comprehensive business plans, identify key performance indicators, benchmark value drivers, evaluate capital allocation efficiency, and align incentives with shareholder interests.
Strategic Alignment
We help you align your strategic objectives with the expectations of your shareholders, ensuring that your business creates and sustains long-term value. We work with you to define and communicate your value proposition, vision, mission, and goals, as well as to identify and manage the key risks and opportunities that may affect your performance. We also assist you in developing and implementing effective governance and stakeholder engagement practises.
Cost of Capital
Cost of capital is a key factor in determining the value of any business, as it reflects the opportunity cost of investing in a specific project or asset. The cost of capital can vary depending on the risk profile, capital structure, industry, and market conditions of the business. Therefore, it is essential to use an appropriate method and data source to estimate the cost of capital that reflects the specific characteristics of the business and its operating environment.
We have extensive experience in providing cost of capital advice for various purposes, such as business valuations, financial modelling, capital budgeting, and strategic decision making. We use robust and reliable methodologies and data sources, such as the capital asset pricing model (CAPM), the weighted average cost of capital (WACC), to estimate the cost of equity, debt, and overall capital for different businesses and industries. We also apply relevant adjustments and benchmarks, such as country risk premiums, size premiums, and industry betas, to account for the differences in risk and return across markets and sectors.
By providing informed advice on the appropriate cost of capital for your business, we help you to make sound financial decisions that support your business objectives and maximise your shareholder value.
We assist management with strategic and financial evaluations, deep analyses of forecast value drivers, and value analyses. Our goal is to equip you with the insights needed for successful negotiations, considering forward-looking value drivers.
Negotiating to buy or sell a business can be a complex and challenging process, involving multiple factors and stakeholders. Obtaining professional advice from a valuation expert can help you to achieve the best possible outcome for your transaction. Some of the benefits of seeking professional advice from Market Line are:
- You can gain an objective and independent assessment of the fair value of the business, based on relevant market data, industry trends, financial performance, and future prospects.
- You can identify and quantify the key value drivers and risks of the business and understand how they affect the valuation and the negotiation strategy.
- You can avoid overpaying or under-pricing the business and ensure that the deal structure and terms are aligned with your objectives and expectations.
- You can enhance your credibility and confidence in the negotiation process, by demonstrating that your valuation is supported by robust analysis and evidence.
- You can comply with the regulatory and accounting requirements for valuing a business, such as due diligence, disclosure, and reporting.
Additionally, by conducting a thorough and accurate valuation before the purchase, you can mitigate the risk of impairment soon after acquiring the business. Impairment can significantly affect the financial health and performance of your new acquisition, leading to unforeseen losses and decreased value.
By engaging Market Line, you can reduce the uncertainty and complexity of negotiating to buy or sell a business and maximise your value creation and protection.
Compliance Valuations
We provide formal valuations for financial reporting and tax compliance, covering areas such as income tax, transfer pricing, Share-Based Payments (AASB 2), Purchase Price Allocations (AASB 3) and taxable Australian real property.
Expert Witness Valuations
We provide independent and objective valuations for litigation purposes, applying rigorous methodologies and industry standards. We can also testify in court or arbitration proceedings, presenting our opinions in a clear and persuasive manner.
Shareholder Valuations
We conduct valuations as required by shareholders’ agreements, ensuring fair and accurate assessments. Shareholder agreements often state that the valuer acts as an expert and not as an arbitrator and therefore the value is binding. Due process should be followed in these valuations, as they may have significant implications for the rights and obligations of the parties involved. We adhere to the highest ethical and professional standards, and we tailor our approach to the specific terms and circumstances of each case.
Share based payments valuations are required when an entity grants equity instruments or other forms of payment to its employees or suppliers as part of their remuneration or compensation. According to AASB 2, the entity must measure the fair value of the share based payments at the grant date and recognise the expense over the vesting period, with a corresponding increase in equity. Share based payments valuations can be complex and require assumptions about future performance, market conditions, and volatility.
Market Line has extensive experience in performing share based payments valuations for a variety of purposes and scenarios. Some examples of our work include:
- Valuing the equity awards granted to employees of a listed company, using binomial model and Monte Carlo simulations to account for performance and market vesting conditions.
- Valuing the management equity plan of a private equity backed company, using a scenario analysis to reflect the different exit outcomes and the impact on the value and dilution of the management shares.
- Valuing the stock options issued to key executives of a private national retail company, using a discounted cash flow approach to estimate the enterprise value and a capital structure analysis to allocate the value to different classes of equity.