In simple terms, the purpose of performing a company valuation is to gain an independent view of the estimated amount for which an asset should exchange on the effective valuation date between a willing buyer and seller in an arm’s length transaction.

Merchantec Capital has performed independent company and equity valuations for private, listed and governmental organisations and has a dedicated team of valuation experts who are able to analyse even the most complex business combinations in an efficient and professional manner. Merchantec Capital has a significant amount of expertise and experience which allows us to use a combination of judgement and market research to review and evaluate assumptions regarding a company’s future, the market in which it operates, the competitive landscape and a host of other key assumptions required to arrive at an independent, transparent and holistic valuation. Sensitivity analysis is also done on the key assumptions in order to stress test the valuation result.

Depending on the industry of the company and the unique nature of the transaction we use various valuation methodologies including, but not limited to, the Discounted Cash Flow methodology, relative Price Earnings multiple methodology (Comparable Company Analysis methodology) and Regressions Analysis methodology.

Some examples of the purposes for which Merchantec Capital provide independent valuations services are set out below:

Indicative and independent valuations

These valuations enable management to make sound decisions around potential transactions, whether as the acquirer or the target, legal disputes (including dissenting shareholder opinions), estate planning, shareholder exits, BEE transactions and corporate restructuring, we perform a valuation of the business as a going concern as well as the underlying equity.

Solvency, liquidity and working capital review

We review the assumptions, calculations and outcomes of the solvency and liquidity requirements of entities as detailed in the South African Companies Act, 2008.

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