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Appraisal

Business appraisal

Business appraisal is required not only for sale and purchase transactions and calculation of the business collateral value, but also for assessment of managerial decision viability that is required for increase in company value.
Business value is a business performance indicator while business appraisal actually means financial, organizational and technical analysis of current operations and prospectives of an enterprise being appraised.

In the course of company appraisal, many factors should be considered.
Initially, one should understand why business appraisal is required.
Mandatory business appraisal may be provided by the applicable laws or statutory instruments. Thus, in order to do some legal actions you should receive the official conclusion on company value in the form of the report on appraisal prepared by an independent appraiser. This is one of the cases. However, if the business appraisal is initiated by your party, i.e. if you wish to perform it to understand the actual value of your business and you do not need the official report on appraisal of the business market value as it is provided by the Federal Law   No. 135-FL, this is another case.

The major difference between these two cases is not the quality of work performed by appraiser but the results. The law provides for specific requirements to appraisal activities. Many of such requirements are reasonable but preparation of the report based on all these requirements usually results in increase of appraisal service price. If the  results of appraisal are documented not in the form of the official report on appraisal but in the form of opinion, then, the detailed requirements specifications for appraisal will be subject to discussion as a result of which the appraisers will apply only the procedures required by your party that allow you to avoid expenses not necessary for you but required when the official procedures provided by the law must be followed.

The business (company) appraisal is required:

·         When selling a business;

·         When selling a part of company (business) assets;

·         When company is subject to restructuring (consolidation, division, merger, etc.) or liquidation upon decision of owners or, in case of bankruptcy, upon the court decision;

·         When insuring the company assets;

·         For taxation purposes;

·         When receiving loan on the pledge of asset conditions;

·         For investment project implementation;

·         For making efficient managerial decisions;

·         When granting a lease;

·         When buying a company or a part of it which is the joint-stock property (stock sale and purchase);

·         When selling/buying a share in registered capital of a limited liability company or partnership.