KPMG NZ has 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.
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.
Valuations are 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.