Quick answer
What are business valuation services?
Business valuation services estimate what a business or its shares are worth on a given date, using methods such as discounted cash flow, comparable companies or net asset value. Companies use them for fundraising, share issues, ESOPs, mergers and share transfers, and some legal purposes require the report from a registered valuer or other specified professional.
- Value depends on purpose, date and method chosen
- Common methods: DCF, market comparables, net asset value
- Some purposes need a registered valuer or specified professional
- Clean books and projections make the report stronger
Why do businesses need a valuation?
Businesses need a valuation whenever shares change hands or new shares are issued at a price, and whenever an investor, lender, buyer or regulator wants an independent view of what the business is worth. The purpose decides the method, the format and who can sign.
| Purpose | Who relies on it | What it usually covers |
|---|---|---|
| Fundraising from angels or VCs | Founders and investors | Pre-money value to support the price per share |
| Issue of new shares | Company, board and authorities | Fair value to justify the issue price |
| ESOPs | Company and employees | Value of shares for grant and exercise |
| Share transfer between shareholders | Buyer, seller and tax authorities | Fair value for the transfer price |
| Investment from or to non-residents | Banks and regulators | Pricing under foreign exchange rules |
| Partner exit or family settlement | Partners and family members | Fair split of business value |
| Merger, acquisition or demerger | Boards, shareholders, authorities | Swap ratios and deal price |
| Bank loans and restructuring | Lenders | Enterprise value or asset cover |
Each purpose may fall under a different law with its own valuation rules. Confirm with a qualified professional before you start.
Who can sign a valuation report?
It depends on the law behind the valuation. Some valuations required under company law or insolvency law must be done by a registered valuer, others under tax or foreign exchange rules name specific professionals, and purely commercial valuations for negotiation can be done by any competent adviser.
Registered valuers are registered with the Insolvency and Bankruptcy Board of India in a particular asset class. Because the rules differ by purpose and change over time, we do not list them section by section here. Before you commission a report, ask two questions: under which law is this valuation needed, and does the person signing hold the qualification that law requires? A report from the wrong kind of signatory may have to be redone, which costs time in a fundraise or transfer.
This page is general information. Confirm the signing requirement for your purpose with a chartered accountant or registered valuer.
Need help with business valuation services? Talk to a chartered accountant in Delhi today. First call is free.
Which valuation methods are used?
Valuers usually look at a business three ways: the cash it will generate (income approach), what similar businesses are worth (market approach), and what its assets are worth (asset approach). Most reports use more than one and explain why one was preferred.
| Approach | Common method | Works best for |
|---|---|---|
| Income | Discounted cash flow (DCF) | Growing businesses with reliable projections |
| Market | Comparable companies or transactions | Sectors with listed peers or recent deals |
| Asset | Net asset value | Asset-heavy or holding companies, or businesses being wound down |
The choice of method must be explained and supported in the report.
How do business valuation services work, step by step?
A valuation engagement moves from understanding the purpose, to collecting financial data and projections, to analysis and a draft, and finally to a signed report with stated assumptions. Most of the elapsed time goes into agreeing projections with management.
- 1
Define purpose and valuation date
Agree why the valuation is needed, the date it must speak to and which law applies.
- 2
Collect information
Share audited accounts, recent management accounts, projections, cap table and key contracts.
- 3
Review projections
The valuer tests growth, margins and capital needs against past results and the market.
- 4
Apply methods and draft
Run DCF, market or asset methods, reconcile the results and prepare a draft report.
- 5
Discuss and finalise
Management reviews facts and assumptions; the valuer issues the signed report.
What documents are needed for a business valuation?
Expect to share at least the last two or three years of financial statements, current management accounts, a projection model and your shareholding details. Missing or messy data either delays the report or forces conservative assumptions that lower the value.
| Document | Why it matters |
|---|---|
| Audited financial statements | Base for historical performance and net assets |
| Latest management accounts | Shows performance since the last audit |
| Projections for the next few years | Core input for the DCF method |
| Shareholding pattern and cap table | Needed to arrive at value per share |
| Details of past share issues | Earlier prices are checked against the new value |
| Key contracts and customer data | Supports revenue assumptions |
| Fixed asset and loan details | Needed for the asset approach and debt adjustments |
A clean monthly MIS makes valuations much easier; see virtual CFO services.
How do valuations work for start-ups and ESOPs?
Start-ups need a valuation report each time they issue shares at a price to investors, and when they set up or grant ESOPs, so that the price can be supported if questioned. Since early start-ups have little history, the report leans on projections and market evidence.
Plan the valuation before you sign a term sheet, not after. Founders sometimes agree a price with an investor and then find the valuation report needs more support. If your company is recognised under Startup India, keep the certificate handy, since recognised start-ups have specific treatment under some rules. Every allotment of shares also means filings with the ROC, so tie the valuation into your ROC compliance calendar. If you are still deciding on the company form, our page on private limited company registration explains why most funded start-ups choose it.
What drives the value of a small business?
Value rises with steady, growing cash flow, a spread of customers, documented systems and clean books, and it falls with dependence on one founder or customer, unpaid statutory dues and unclear ownership of assets. Valuers look for evidence on each of these points.
For a Delhi family business, the biggest discount often comes from informal practices: property used by the business but owned by a relative, cash sales, or loans between group firms with no paperwork. Fixing these a year before a sale or investment usually adds more value than any method choice. Recurring revenue, signed contracts and a second layer of management all help, because they make future cash flow more believable to an outsider.
Common mistakes in business valuations
The most common problems are unrealistic projections, the wrong valuation date, a signatory without the qualification the law needs, and a value that does not match earlier or later share issues. Each of these can lead to questions from authorities or investors.
- Hockey-stick projections. Growth far above past results, with no plan behind it, weakens the whole report.
- Ignoring debt and cash. Enterprise value must be adjusted to reach equity value per share.
- Old date. A valuation as of last year may not support a share issue today.
- Inconsistent prices. Issuing shares at very different prices within a short period invites scrutiny.
- No written assumptions. A report without clear assumptions is hard to defend later.
Which listed firm offers business valuation services?
Among the firms on CA in Delhi, Moneymji lists valuation as part of its transaction advisory work, along with due diligence, business plans, financial modelling and pitch decks. Its office is in Pearls Business Park at Netaji Subhash Place, and it describes itself as a business registration and compliance firm.
Where your purpose needs a registered valuer or another specified signatory, confirm that the person who will sign holds that qualification before you engage anyone. You get a fixed quote for the agreed scope before work starts. To see all three listed firms side by side, visit the Delhi CA firms directory. Family businesses in West Delhi can also read our CA in Punjabi Bagh page.
Frequently asked questions
What does a business valuation report contain?
It states the purpose, the valuation date, the information relied on, the methods used, key assumptions, the resulting value and any limitations. It is signed by the valuer with their qualification. A good report explains why the chosen method fits the business.
Is a registered valuer needed for every valuation?
No. Only some purposes, mainly under company law and insolvency law, require a registered valuer. Other purposes name different professionals, and purely commercial valuations have no fixed signatory. Check the law that applies to your case before commissioning the report.
How long does a business valuation take?
For a small company with audited accounts and a ready projection model, it can be quick. Most delays come from building or agreeing projections, collecting cap table details and answering the valuer's questions. Start early if the valuation is tied to a fundraise or a board meeting date.
Can I use the same valuation for fundraising and ESOPs?
Sometimes, if the purpose, date and signatory requirements match. Often they do not, because the rules and dates for each purpose differ. Ask the valuer whether a single report can cover both before you rely on it.
What is the difference between enterprise value and equity value?
Enterprise value is the value of the whole business before considering how it is funded. Equity value is what belongs to shareholders, found by deducting debt and adding surplus cash. Price per share is based on equity value divided by the number of shares.
Does a valuation guarantee the price investors will pay?
No. A valuation supports a price with evidence, but investors negotiate on their own view of risk and growth. The report helps you defend the price you agree and meet legal requirements around share issues.
Can a partnership firm get a business valuation?
Yes. Partnership firms often need one when a partner retires, a new partner joins or the firm converts to a company or LLP. The valuation helps settle each partner's share fairly and is usually a commercial valuation agreed between the partners.
What does a DCF valuation depend on most?
Mainly the cash flow projections and the discount rate. Small changes in growth, margins or the discount rate can move the value a lot, so the valuer should show how sensitive the result is to each assumption.
How do I get a quote for business valuation services?
Use the enquiry form and mention the purpose, the valuation date, the company type and whether audited accounts and projections are ready. You get a fixed quote for that scope before any work begins.