Project valuation and Feasibility study

Project valuation and feasibility study services provide plausible, solid valuations and robust business models.

More than before, valuation exercises are becoming common and a requirement for varied purposes including acquisitions, disposals, buyouts, restructuring, fundraising, financial reporting , statutory and legal. Feasibility study services of OBM can provide robust business models through providing you access to a team of financial valuators and modelers.

Project valucation and Financial modeling for M&A

It is often determined by enterprise-specific factors and takes place, for instance, when internal restructuring is carried out or when decisions regarding new investments, disposal of assets or separate business units are made.

The need for valuation is also determined by external factors and may result from, for instance, the accounting standards adopted by an enterprise which require the valuation of intangible assets (such as the customer base or trademarks) to be carried out following the transaction (as part of the "purchase price allocation")

Purchase price allocation

An acquirer allocates the purchase price to the assets acquired and liabilities assumed at fair value (FV) on the acquisition date (the first green bar in the chart to the left). Normally, the purchase price exceeds the FV of these assets and liabilities, resulting in goodwill (the second green bar in the chart to the left). Why would anyone pay more for something than it is supposedly worth? Perhaps because the acquirer expects to create value through synergies or better management, giving the target's sellers leverage to demand a premium for their business.

Valuation of Intangible assets and the purchase price allocation process

A purchase price allocation is typically needed in the transaction execution and integration stages of a transaction. It can be done on a preliminary basis during the financial due diligence phase to give an indication of assets and liabilities likely to be acquired, particularly intangible assets, together with their likely impact on future earnings. It can then be formalised after completion of the transaction which involves discussions with the company’s auditors to ensure that all financial impacts are quantified and agreed prior to the relevant review or audit date.

Impairment testing for various assets

An impairment test measures whether a balance sheet item is worth the amount stated on the balance sheet. Impairment testing can be applied for both commercial (audit) accounts and tax accounts. The impairment test is carried out according to a complex methodology that necessitates specialised know-how. Moreover, strict accounting standards apply to implementation. Our employees lend you competent and committed support. We see it as our task to ensure that you are adequately prepared in good time and therefore recommend that the impairment test should be set up as a permanently installed process in the accounting system.

The advisory services provided by our valuation experts are:
  • Implementation of the process for the impairment test
  • Carrying out of the annual impairment test determining the relevant valuation parameters such as capital costs
  • Scenario analyses upon the change of major parameters
  • Plausibility check on the financial planning underlying the impairment test

Financial model reviews and audits

Financial modelling involves the process of forecasting the performance of businesses and assets, using relationships among a range of variables. This provides management with leading insight into the short term or even long term business environment. Our financial model review process is systematic and thorough and conducted by a team with strong capabilities in advanced modelling.

Our project valuation and feasibility study services include:
  • Independent valuation and financial modeling for M&A
  • Purchase price allocation and intangible valuation
  • Impairment testing for various assets
  • Expert valuation for dispute resolution
  • Develop bespoke business and operational models
  • Financial model reviews and audits