Business valuation is a key component of investor activities in the financial markets and plays an important role in the life cycle of a company. In many instances, it is carried out for purposes relating to matters such as mergers, acquisitions, divestitures, transfer of shares among shareholders, compliance with tax regulations etc. Business valuation is also featured in financial reporting as fair value measurement anchored itself in accounting practice. In addition to the above, business valuation has further gained prominence in Singapore because of key developments such as the rise in arbitration and litigation proceedings due to commercial and shareholders’ disputes and the growing importance of intellectual property (IP) in business.
In today’s increasingly technology centric economy, intellectual property plays a critical role in driving the value of many businesses, including that of many SMEs. In 2017, the Committee on the Future Economy (CFE) identifies IP as a key driver of economic growth. The Intellectual Property Office of Singapore (IPOS), together with private equity firm, Makara Capital, launched a one-billion dollar Makara Innovation Fund (MIF) to drive enterprise growth for the future economy. Specifically, it seeks to help high growth companies with strong IP and proven business models to grow and expand into world markets. At the same time, the CFE Report of the Working Group on Accounting and Legal Services has identified Business Valuation as one of the ninth high growth practice areas for the region which can help drive the demand for Singapore’s legal and accounting services. In today’s competitive and innovation driven corporate environment, as SMEs seek to expand their business, companies need to have a strategic outlook, be innovative in developing products, possess market development capabilities, and exhibit operational excellence in execution, amongst other things. In addition to the entrepreneurial aspects, to be successful, the company will also need to learn how to navigate effectively in the corporate and professional space, particularly in the areas of fund raising as well as mergers and acquisitions, which will have an impact on its growth journey. Business valuation plays an important role in this aspect. The company will need to identify the value drivers of the business, understand their role in value creation, determine the value created, and communicate this value to the relevant stakeholders. This programme is designed for the valuation of SMEs. It will provide participants with the conceptual framework, which will include the fundamental principles, basis of valuation, valuation context and an insight into the valuation landscape, standards adopted internationally and across various jurisdictions. An in-depth study of the valuation process, approaches and methods of business valuation adopted in the market place to determine the value of businesses and companies will be carried out. Specifically, practical insights into issues and challenges affecting the value creation of SMEs will be explored in depth. This includes the focus on areas such as, the role of intellectual property in SMEs, the contributors to future economic benefits (e.g. growth and margins), factors that affect the state of the business in this new era, the strategic and operational readiness of the business, delineation of ‘personal’ and ‘commercial’ considerations, nature of goodwill in the business etc.
Essentially, this programme will provide the participants with an appropriate framework and knowledge base to identify and recognize the value drivers of SMEs, to appreciate the value creation process, and to learn how business valuation is carried out for SMEs in a practical sense. The end result is to enable the participants to determine the value of an SME’s business that is theoretically acceptable, and legally defensible in the market place.