The team at KPMG NZ offers a depth of international valuations experience and skills which span Asia, USA as well as Australasia. Our New Zealand clients enjoy the confidence and global resources that KPMG can deliver. These include KPMG’s global methodologies and research into valuation issues affecting the capital markets.
KPMG NZ has also developed proprietary databases relevant to the New Zealand market, such as our NZ private company transaction database, royalty rate database and valuation impairment databases, the latter covering impairments of companies listed on the NZX. These provide relevant market benchmarks which are used as part of our valuations approach.
If your organisation requires specialist valuation services, we would like talk to you. Our clients range from large overseas and New Zealand listed companies to privately held, medium size organisations, which operate across diverse sectors.
We can guide you through challenging valuation issues irrespective of whether they arise from changes in ownership structures, capital management or in response to the requirements of the regulatory environment.
Changes in ownership structures and capital management often create the need to establish a valuation range for businesses and/or key assets. These include the following.
- Sale of a business, asset or strategic shareholding.
- Acquisition of a business or entry into a joint venture or alliance.
- Capital raising to secure debt, equity and hybrid instruments such as convertible bonds.
- Investment appraisal to guide significant planned capital expenditure.
- Strategic planning to establish the relative value of different operations and assets.
- Confirming the asset base underlying unlisted, managed funds to support pricing.
- Resolution of disputes.
- Restructuring of businesses in distress.
Valuations are also driven by the need to meet regulatory requirements.
- Purchase price allocation for business acquisitions. Purchase consideration must be apportioned between tangible and intangible assets to conform to International Financial Reporting Standard (IFRS) 3. This requires a balanced approach, given that intangible assets such as brands, trademarks and technology may be amortised over their useful lives. By contrast goodwill cannot be amortised but is subject to annual review.
- Impairment testing to ensure the value of goodwill has not been adversely affected by market factors. This is an annual requirement under IAS 36 and can have a significant impact on earnings volatility. Consequently, purchase price allocation is a critical factor when establishing the residual value of goodwill.
- Independent expert reports to comply with the New Zealand Stock Exchange rules. These are typically relevant to takeovers, demergers, substantial shareholding changes and related party transactions. Each report is highly structured and detailed, culminating in an opinion as to whether the contemplated transaction is fair and reasonable or in the best interest of investors as a whole.
- Tax valuations to assist in negotiations with tax authorities or to manage the tax implications resulting from ownership changes. Changes in corporate structure or individual shareholdings can create tax liabilities. In the event these are subject to external scrutiny, having the relevant valuation documentation to hand can help conclude such matters efficiently. Further, tax valuations assist in optimising the tax benefits of acquisitions and divestments and hence, should form part of the workflow for any corporate finance activities.
- Employee share schemes to establish the value of equity settled payments to employees. When employee remuneration includes shares or the right to acquire shares, these benefits must be quantified in order to meet the requirements of IFRS 2.
- Investments held at market value to provide greater assurance regarding key assets on the balance sheet. This would include documenting the value and the valuation bases of derivative securities like options and futures as well as internally valued assets. The valuation and methodology must be disclosed in the accounts to comply with IAS 39.
- Holdings of biological assets such as crops, forests and vineyards. These assets must be valued annually in order to conform to IAS 41.
The regulatory environment is constantly changing – for example, there will soon be a further accounting standard to observe, IFRS 13. This provides guidance on how fair value should be measured and comes into effect in January 2013. IFRS 13 will impact the value apportioned to assets and liabilities and hence will have implications on the residual value of goodwill and hence reported profitability.
An experienced, cross disciplinary approach
With diverse triggers for valuation assistance, KPMG takes a collaborative approach to its provision of advice. We work closely with our Tax, Accounting, Mergers & Acquisitions, Financial modelling and Restructurings specialists as required, to deliver commercially and rigorously prepared valuation advice to meet your needs.
When relevant, we also access resources from KPMG’s circa 800 valuation professionals worldwide, who operate in approximately 40 countries.
We believe this multi disciplinary approach is vital to cater to the complexity and volatility of the environment which our clients operate in.
If you want to optimise your approach to ownership transfers, capital management or the impacts of the regulatory environment on your business success, we’d welcome having a no obligations chat or you can email our Valuations team now.