Sapphire performs valuations for both publicly traded as well as privately held firms. Our services include analyzing and explaining the potential impact of alternative valuation techniques and transaction structures. Building on the experience of the team in valuing businesses across industry sectors, Sapphire uses several valuation techniques to build a possible range of valuations.

Businesses or fractional interests in businesses may be valued for various purposes such as mergers and acquisitions, sale of securities, and taxable events. Valuation exercise is carried out for:
  • Estimating the value of equity shares of a company
  • Determining the business valuation of a company
  • Estimating the value of Intellectual property which includes trademarks, patents, brands, copyrights among others
In general, there are three approaches to valuation namely:
  1. Income Approach/Discounted Cash Flow Analysis
    This approach relates the value of an asset to the present value of expected cash flow from the asset. There are three paths to a discounted cash flow valuation – the first is to value equity stake in the business; the second is to value the entire firm, which includes, besides equity, the other claimholders in the firm (bondholders, preferred stockholders, etc); and the third is to value the firm in pieces, beginning with its operations and adding the effects on value of debt and other nonequity claims.
  2. Market Approach/Relative Valuation
    This approach estimates the value of an asset by looking at the pricing of comparable assets relative to a common variable such as earnings, cash flows, book value or sales. One illustration of this approach is the use of an industry-average price-earnings ratio to value a firm, the assumption being that the other firms in the industry are comparable to the firm being valued and that the market on average, prices these firms correctly. The other two multiples that are widely used are Price-book value ratio and price-sales ratio. There are other multiples that also play a role in analysis – price to cash flows, price to dividends, and market value to replacement value (Tobin’s Q) to name a few.
  3. Net Asset Valuation
    This approach values the individual assets owned by a firm and aggregates them to arrive at a firm value. In fact, there are several variants on asset-based valuation models. The first is liquidation value, which is obtained by aggregating the estimated sale proceeds of the assets owned by a firm. The second is replacement cost, where an estimate of what it would cost to replace all of the assets that the firm has today, is arrived at.
Our broad procedures for the value analysis will comprise:
  • Analyzing the audited/ unaudited financial statements of the company.
  • Considering the estimates/ projections for the company as prepared by company management.
  • Conducting discussions with company management to understand key value drivers, competitive scenario, future outlook and regulatory aspects affecting the business.
  • Conducting Interviews and correspondence with the company management.
Practice Areas
» Buy/Sell Side Advisory
» Private Equity Placement/Advisory
» Structured Finance
» Strategic Advisory
» Valuation

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