Business Valuation of Small Medium Enterprises

Overview

Understanding the Value Drivers and the Worth of Your Business

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.  

Next Course Starts On10 Apr 2019 (Wed) See Full Schedule
Fee SGD1712.00* (as low as SGD193.60* after maximum funding) Learn more
Duration

2 Day

Level
Intermediate
Venue

SMU

Learning Objectives

Upon completion of this programme, the participants should have a sound understanding of valuation theory, coupled with practical skills in business valuation. The main objectives are to develop the ability to: 

  • understand the important role that valuation plays in the financial and corporate world;
  • differentiate various definitions and premises of value and their implication to the valuation outcome;
  • understand international valuation standards and valuation guidelines, concept of value, principles of valuation, and their application to the conduct of valuations;
  • adopt a valuation process which is undertaken in a transactional environment and acceptable in legal jurisdiction;
  • perform business valuation through the application of the various valuation approaches/methodologies commonly used by practitioners and arrive at an outcome that is theoretically sound and legally defensible in practice;
  • identify the various issues and challenges when conducting valuation;
  • distinguish between various discounts and premiums applicable to valuation and appropriately apply them in valuing minority interest, private companies etc., and • learn practical skills, tools and techniques to perform valuation of SMEs and prepare credible reports in real life scenarios in line with international valuation standards.
     

Topics/Structure

Business Valuation Essentials and Approaches

1. The business valuation landscape

2. Competencies, role and behaviour of business valuers

3. Principles of valuation and the valuation context

4. Bases of value

5. Business valuation process  

6. Structure and components of a business valuation report

7. Business valuation approaches – Asset based approach
7.1. Understand the asset-based approach
7.2. When to use the asset-based approach
7.3. Determine tangible asset backing
7.4. Determine adjusted net asset value
7.5. Determine Liquidation value (orderly and forced liquidation basis)
7.6. Issues to consider when using the asset- based approach 

Business Valuation Approaches, Issues and Case Study

8. Valuation approaches - Market approach
8.1. Understand the market approach
8.2. When to use the market approach
8.3. Application of comparable companies method
8.4. Application of comparable transactions method
8.5. Issues to consider when using the market approach
 

8.6. Valuation parameters
8.6.1. Comparable companies selection
8.6.2. Understand and evaluate different sources of data and its reliability
 

8.6.3. Determine common valuation multiples used in practice
8.6.3.1. Enterprise value multiples
8.6.3.2. Equity value multiples

9. Valuation approaches - Income approach
9.1. Understand the income approach
9.2. When to use the income approach
9.3. Application of discounted cash flow method
 

9.4. Valuation parameters

9.4.1. Determine discount rates
9.4.1.1. Approaches to determine cost of equity
9.4.1.2. Approaches to determine  cost of debt
9.4.1.3. Determine debt/equity mix
9.4.1.4. Determine weighted average  cost of capital (WACC)

10. Issues and challenges in valuation
10.1. Discounts and premium
10.2. Selection of comparable companies
10.3. Equity risk premium
10.4. Capital structure  
10.5. Using multiples in economic crisis
10.6. Role of intangible assets/intellectual properties

11. Business valuation case study
 

Who Should Attend

Professionals who work with SMEs, owners of businesses, CFOs, finance managers, controllers, anyone working in SMEs who is interested in understanding business valuation for SMEs.
 

Assessment

The programme will end with an assessment to evaluate your learning and understanding.
 

Fees and Funding

SkillsFuture Series 
Course fee grant at 70% of course fees (excluding GST) for participants who are successfully enrolled by SMU into approved courses under the Programme. Participants must be Singapore Citizens or Singapore Permanent Residents.

SkillsFuture Mid-Career Enhanced Subsidy ("MCES")
Up to 90% of course fees for Singapore Citizens aged 40 years and above

Enhanced Training Support for SMEs ("ETSS")
Up to 90% of course fees; and 80% of basic hourly salary capped at $7.50/hr for local employees of SMEs

SkillsFuture Credit
Singapore Citizens aged 25 and above, and self-funding may use their SkillsFuture Credit (up to S$500) to defray part of the course fee. Please click User Guide on how to submit your claim. SkillsFuture Credit claims may be submitted by logging in via MySkillsFuture.sg.

Full Fee: S$1,712 per participant (including GST)

Nett fee payable after SkillsFuture Singapore (SSG) Funding:

  • S$513.60 (including GST) for Singapore Citizens and Singapore Permanent Residents
  • S$193.60 (including GST) for Singapore Citizens aged 40 years and above

Schedule

Start Date(s)
Intake Information

10 April (Weds) & 11 April (Thurs) 2019

Speaker/Trainer Bio

Eric Teo has over 25 years of professional experience and is a Business Valuation Pracademic, serving as Consultant to organisations and as an Adjunct Associate Professor/Faculty at universities such as Nanyang Business School (Nanyang Technological University), School of Business (Singapore University of Social Sciences), Singapore Institute of Technology and School of Business and Governance (Murdoch University).  He was an Executive Director with Ernst & Young (EY) Transaction Advisory Services Group and has worked in both the Singapore and Australia practices. He was a founding member of EY Global Valuation & Business Modelling (VBM) Network’s Technical Standards Group (TSG), has served in the Steering Committee and led the EY Asia Pacific VBM TSG from 2012 to 2015.  He was also a member of the EY Global VBM Learning & Development committee and was involved in the development of learning curriculum and training materials for the global valuation practice. His experience includes providing advice in relation to corporate strategy, investments and divestitures, fairness opinions and business valuation.  

He has led in transactions relating to litigation support, tax planning, restructuring and compliance, capital raising, mergers and acquisitions, shareholder disputes and financial reporting. Eric has worked with companies from various industries and his clients include SMEs, GLCs, MNCs and publicly listed groups.

Eric is the Founding Chairman of the Council of the Institute of Valuers and Appraisers of Singapore (IVAS).  The IVAS is an institute set up to advance the business valuation profession under the auspice of the Singapore Accountancy Commission. He is also the Chairman of the International Valuation Standards Council (IVSC) Membership and Standards Recognition Board. The IVSC is the global organisation which produces the International Valuation Standards (IVS) for the valuation profession. Eric is a Chartered Accountant (Singapore), Chartered Accountant (Australia and New Zealand), CPA (Australia), Chartered Valuer and Appraiser (Singapore), Senior Fellow of Finsia and Fellow of the Royal Institution of Chartered Surveyors (RICS).
 

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