A non-systematic approach severely impacts the timelines of valuation.
How our approach helped a company pull off their valuation in a seemingly impossible timeframe.
BACKGROUND
A company listed on the National Stock Exchange hired a firm to perform a valuation for Financial Reporting purposes. A timely report was required to present the company’s value to stakeholders ahead of its scheduled Annual General Meeting.
THE BURNING PROBLEM
The timelines of the valuation exercise were not explicitly mentioned in the Engagement letter & hence the report timelines were perceived differently by the appointing company & the valuation firm.
No point of contact from both these firms made the process even more delayed lacking accountability.
Due to time constraints, the company failed to allocate resources & details sought by the valuer for completing the valuation.
The valuation report could not have been delayed at any cost since the date of the AGM was fixed, leaving little time on the table for coordination & valuation.
WHAT SHOULD HAVE BEEN DONE
- Mention the timelines for submission of the report in the Request for Quotation as well as issuing the Engagement Letter
- Establish a SPOC (Single point of contact) from both parties to facilitate smooth execution & seamless communication
- Discuss in advance the details the valuer seeks, based on their materiality
- The company must inform clearly about the availability of resources & data at their end
CONCLUSION
Both parties burned the midnight oil to complete the valuation exercise, which was unlikely to happen if the best practices were followed.
FAQs
1. Why is timely submission of a valuation report important?
Timely submission ensures regulatory compliance, aids decision-making, and avoids delays in transactions, mergers, or audits.
2. Who requires valuation reports to be submitted on time?
Regulatory bodies (like SEBI, RBI), auditors, financial institutions, and corporate stakeholders require timely submission for various statutory and strategic purposes.
3. What are the consequences of delayed valuation report submission?
Delays can lead to penalties, compliance issues, financial misstatements, stalled transactions, and reputational damage.
4. How can valuers ensure timely submission of their reports?
Valuers can ensure timely delivery by having a clear scope, access to accurate and complete data, stakeholder coordination, and well-defined internal workflows.
5. What documents are usually required for preparing a valuation report?
Key documents include financial statements, asset registers, legal ownership papers, business projections, and regulatory filings.
6. How does digitalization help in timely valuation reporting?
Digital tools and automated data collection enable faster analysis, real-time updates, and streamlined report generation.