Valuation of shares, businesses, and intangibles

The valuation of shares, businesses, or intangibles consists of estimating the “fair market value” of the company by considering various elements related to their performance.

Why is it necessary?

Having a valuation performed by an independent third party allows the involved parties to establish a reference point from which to start a conversation or negotiation.

In the case of transactions involving the purchase or sale of shares, businesses, or intangibles between related parties, it is an annual tax obligation established in Article 76, sections IX, XII, and XIII of the Income Tax Law.

Additionally, in some cases, it is used as support for calculating tax withholdings derived from the purchase or sale of these types of assets.

Scope

Analysis and collection of relevant information: The objective of this phase is to gain an understanding of the relevant aspects related to determining the value of the assets, as well as collecting the information necessary for their analysis.
Financial and market analysis: AGD will perform a financial analysis of the company and the industry to determine the role that Cristal International Standards México, S.A. de C.V. plays within it and thus establish current and future financial conditions.
Determination of fair market value: Based on the information gathered in the previous steps, the most appropriate valuation approach will be applied to determine the fair market value of the appraised asset.
Deliverables: Valuation report

Related Consultants

Roberto González Morelos

Transfer Pricing

José Luis Parada

Transfer Pricing

Jorge E. Castellón

Transfer Pricing

Emilio Camero Luna

Transfer Pricing

Frequently Asked Questions

Am I required to perform a Valuation if the transaction is carried out between related parties?

Yes, the obligation to conduct intercompany transactions at market values and to have an analysis considering the methodology described in the Law applies to any intercompany transaction (between domestic entities and/or with residents abroad).

Is performing a valuation to document an intercompany transaction the same as a Transfer Pricing Study?

No, a transfer pricing study must additionally be carried out, applying one of the methods described in the LISR and using the valuation report as a basis.

What methods do you use to determine value?

Depending on the asset and the purpose of the valuation, we apply income (discounted cash flow), market (comparable multiples) or cost approaches. In most cases more than one is used, in order to contrast results and support the resulting value range.

How long does a valuation take?

Three to six weeks in most cases, depending on the availability of financial and operating information. The stage that takes the longest is usually gathering information, not the analysis itself.