Valuations for Mergers, Demergers & Restructuring
Precise Swap Ratio and Share Exchange Ratio reports for effective corporate restructuring. Certified insights for M&A delivered by expert IBBI Registered Valuers.
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What is Restructuring Valuation?
Corporate restructuring - whether through a Merger, Demerger (Spin-off), or Slump Sale - requires an unbiased determination of the relative worth of the entities involved. Valuation for Restructuring is the process of calculating a fair exchange value to ensure that the interests of shareholders, creditors, and promoters are protected.
At Biz Valuations, we specialize in determining the Share Exchange Ratio and Swap Ratio. We move beyond simple balance sheet figures to evaluate benefits, tax implications, and future earnings potential, providing a strong valuation report that serves as the foundation for NCLT (National Company Law Tribunal) approvals and stakeholder consensus.
Why You Need Restructuring Valuation?
A professional valuation report is a mandatory requirement under the Companies Act, 2013 for any court-approved scheme of arrangement. We provide defensible reports for:
Mergers & Combinations
Determining the Swap Ratio to decide how many shares of the acquiring company the shareholders of the target company will receive.
Demergers & Spin-offs
Calculating the Share Entitlement Ratio for shareholders of the demerged entity in the new resulting company.
Slump Sales
Valuing an entire business undertaking as a "going concern" for a lump-sum consideration without assigning individual values to assets.
Internal Restructuring
Facilitating capital reduction, consolidation of holdings, or realignment of business verticals for operational efficiency.
Takeovers & Open Offers
Providing valuation support for compliance with SEBI (SAST) Regulations.
Who Needs Restructuring Valuation Services?
Specialized Solutions for Corporate Reorganization
Our team provides specialized valuation services for complex deal structures:
Key Benefits of Working with Biz Valuations
The success of a merger often depends on a "Fair" valuation that prevents litigation and regulatory delays.
Types of Restructuring We Serve
We understand the unique valuation qualities of different deal types:
Our Valuation Methodologies
For mergers and demergers, we utilize the Relative Valuation approach, often assigning weights to the following:
Asset Approach (NAV)
Used primarily for investment-heavy or manufacturing companies to find the "floor" value.
Market Approach (Comparable Multiples)
Using EV/EBITDA or P/E multiples of peer companies to determine market-linked value.
Income Approach (DCF)
Determining the present value of future cash flows, including the "Synergy Value" created by the merger.
Market Price Method
For listed companies, using the weighted average share price as per SEBI formulas.
Regulatory Compliance & Standards
Our restructuring valuations refer to the latest Indian legal frameworks:
- Section 230-232 of Companies Act, 2013: Mandatory valuation for mergers and arrangements.
- Income Tax Act (Section 2(19AA) & 50B): Compliance for "Tax-Neutral" demergers and Slump Sale taxation.
- SEBI Regulations: Compliance for listed entities involving Fairness Opinions from Merchant Bankers and Valuation Reports.
- Ind-AS 103: Accounting for business combinations and determining the fair value of consideration.
- FEMA Guidelines: Valuation requirements for mergers involving foreign entities.
Our 4-Step Restructuring Roadmap
1. Strategic Scoping
Identifying the type of restructuring (Merger, Demerger, etc.) and the regulatory requirements (NCLT, SEBI, IT).
2. Relative Valuation Modeling
Building parallel models for all entities involved to ensure a "Like-for-Like" comparison.
3. Ratio Determination
Arriving at the Swap Ratio or Entitlement Ratio based on weighted average values.
4. Certification & Support
Issuing the final Valuation Report and providing necessary clarifications to regulators or auditors during the approval process.
Specialized Restructuring Services
We handle the technical complexities that define high-stakes corporate deals.
Swap Ratio Calculation
A precise mathematical determination of the exchange of shares between two companies, ensuring no value leakage.
Share Entitlement Ratio
Specifically for demergers, deciding the allocation of shares in the new entity to existing shareholders.
Purchase Price Allocation (PPA)
Post-merger support to allocate the deal price to tangible and intangible assets for the consolidated balance sheet.
Fairness Opinions
An additional layer of protection where we certify that the transaction is financially fair to all classes of shareholders.
Goodwill Assessment
Calculating the capital reserve or goodwill arising from the restructuring scheme.
Frequently Asked Questions
1What is a Swap Ratio in a merger?
A Swap Ratio is the exchange rate at which an acquiring company offers its own shares in exchange for the target company’s shares. For example, a 1:5 ratio means shareholders get 1 new share for every 5 they own.
2Is a valuation report mandatory for NCLT?
Yes. Under the Companies Act 2013, a valuation report from an IBBI Registered Valuer is a mandatory document to be filed with the NCLT for a Scheme of Arrangement.
3How is a Demerger different from a Slump Sale for valuation?
In a demerger, shares of the new company are issued to shareholders of the parent company (tax-neutral). In a slump sale, the company itself receives a cash "lump sum" for the business unit.
4 Do we need a Merchant Banker for a merger valuation?
If the company is listed, SEBI requires a Fairness Opinion from a SEBI-registered Category-I Merchant Banker, in addition to the valuation report.
5 What is a "Fairness Opinion"?
It is a professional letter provided by an independent firm stating that the proposed swap ratio or price is "fair" from a financial point of view to the shareholders.
6Can the Swap Ratio be based only on Book Value?
Rarely. While Asset Value is considered, the NCLT and tax authorities usually look for a "Fair Value" that includes market prices and future earning capacity.
7 How long does a merger valuation take?
Due to the complexity of valuing multiple entities, it typically takes 10 to 15 business days once all data is provided.
8 What happens if shareholders object to the valuation?
A robust, defensible report by a Registered Valuer significantly reduces this risk. If objections arise, the valuer may be required to explain the methodology to the NCLT.
9Does a merger affect the tax cost of shares?
In a compliant demerger or merger, the period of holding of the original shares is usually carried over, making it tax-neutral for shareholders.
10Can you value a "Negative Net Worth" company for a merger?
Yes. In such cases, the valuation focuses on the Income Approach (future turnaround potential) or strategic value (synergy) rather than current assets.
Know Your Worth. Grow Your Business.
Don't let an inaccurate valuation derail your corporate strategy. Whether you are merging two giants or spinning off a new startup, you need a Swap Ratio that is defensible, compliant, and fair.
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- Trusted Across 1,600+ Projects
- Confidence of Leading Businesses