Groves & Partners specialise in providing accurate and reliable shareholding valuation services to help businesses accurately determine the value of minority stakes in a company. Our minority shareholding valuation services provide businesses with an in-depth analysis of the value of their shares. This can be used for a range of purposes, including when they are considering buying or selling a minority stake in a company, when they are involved in a dispute with other shareholders, or when they are planning to raise capital through the issuance of new shares. By using our services, businesses can gain a clear understanding of the true value of their minority stake, and make informed decisions.
In our experience, valuing minority shares in a private company requires specialised knowledge and expertise. Some of the unique characteristics of minority shareholding valuations are:
- Limited information access
- Lack of control
- Different voting rights
- Illiquidity and marketability restraints
The size of an interest and the level of influence held by a minority stakeholder varies from circumstance to circumstance, meaning significant experience is required to ensure valuation advice is reliable and defensible. Our team consists of Chartered Accountants, Registered Business Valuers, and Certified Minority Interest Valuers with specialist skills and significant experience.
Our Minority Interest Valuation Process
Minority shareholders often lack control over the company’s decision-making process, and may face difficulties in obtaining relevant information. Our approach to a minority shareholding valuation is tailored in consideration of the specific circumstances of our clients.
Our typical process is outlined below:
1. Initial no-cost review
We commence by reviewing information regarding the minority interest to the extent that this is possible. In doing so, we will often review documents such as financial statements, shareholder agreements, operational performance characteristics, market dynamics and industry trends. This review allows us to make an early determination of the nature of investigations we will need to undertake, as well as to understand the technical approaches required in valuing the minority shareholding.
2. Confirm scope of engagement
Following the conduct of our initial review, we will advise you of our professional fees to undertake a valuation, and the scope of our engagement.
3. Data and information request
We prepare a thorough information and data request schedule to enable an accurate valuation of minority shareholdings. This data request is typically tailored to lessen the stress and the pressure involved when our clients gather their data.
4. Initial data and information review
We review the data and information provided in response to our information and data request schedule. We then conduct technical analysis, and consider any additional data or information required for the completion of our valuation services.
5. Valuation report preparation
We will provide you with a report which outlines the value of the minority shareholding. The report will clearly advise the key inputs, which form part of our valuation opinion. We also provide a comprehensive explanation to outline our reasoning for selecting specific valuation methods, and our calculation of value derived from the selected valuation strategy.
6. Meetings with you and your advisors
We typically conduct regular meetings with you and your other professional advisors, such as your accountants and lawyers. This is to provide time-sensitive advice regarding the nature of the valuation and our work. We are committed to maintaining ongoing communication and engagement with our clients.
What is a minority shareholding?
A minority shareholding is an interest in an entity, which does not exert control over the operation of that entity. This means the individual or entity owns less than 50% of the outstanding shares in the company. Furthermore, they do not have control of its management or decision-making processes.
How is a minority shareholding valuation different from a majority shareholding valuation?
The key difference between a minority shareholding valuation and a majority shareholding valuation lies in the level of control that the respective shareholder has over the company. As highlighted, a minority shareholder is one who owns less than 50% of the business and thus, has limited influence over the company’s decisions. This difference in control is a critical factor in the valuation process of minority shareholdings.
Why do I need a minority shareholding valuation?
You may need a minority shareholding valuation if you are buying or selling shares, settling a dispute, or complying with tax or accounting regulations.
Can a minority shareholding be updated overtime?
Yes, a minority shareholding valuation can be updated over time to reflect changes in market conditions, financial performance, or other relevant factors.
How do you handle conflicts of interest during the valuation process?
We are an independent valuer that follows ethical guidelines, and disclose any potential conflicts of interest.
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