Successful case studies where valuation played a key role

Colliers REview Singapore blog - CIVAS successful case studies valuation played key role

These two cases highlight the value of a valuer, whether in a break-up or “marriage” situation.

In both cases, the valuer was jointly appointed by both parties – underlining the trust that they had in the valuer as an independent professional to come up with unbiased opinions.
Case study #1: The feuding partners

The services of a valuer were engaged when two feuding partners in a spare parts manufacturing business wanted to go their separate ways.

The situation of how to split the business in an equitable manner based on each contribution to the booming business, turned out to be a major issue. Each partner had engaged lawyers to act for them but the negotiations were bogged down for a couple of years on the split of the business, to the point where the two partners were prepared to go to court to resolve the matter.

However, just before they took the dispute to court, one of the lawyers suggested engaging a valuer to assess their tangible assets heavy business. Both partners agreed, and a valuer was jointly appointed. The valuer got down to work quickly and came up with a robust and fair valuation of the assets, which then enabled both partners to go their separate ways in an equitable manner without going to court – which would have cost them more money and time than the services of a valuer.

Case study #2: A happy union

Another case involved Company A - which was cash-rich and was casting around for diversification. It spotted a synergistic opportunity in Company B, a small-to-medium-sized enterprise (SME) manufacturing company which had potential, and was looking to scale-up its operations.

Company B was receptive to A’s overtures. The next step was to put a value to B’s assets to determine how much cash A should inject for the equity stake it had in mind. A valuer was appointed jointly by both parties – the acquirer (A) and acquiree (B) to map out the assets’ value. Company B is now part of the larger Company A.


The standard bearers of good valuation service

The following associations provide good quality valuers, especially for plant and machinery. They have minimum standards and guidelines to which valuers have to adhere to:

  • The International Valuation Standards Council (IVSC) is an independent, not-for-profit organisation that produces and implements universally accepted standards for the valuation of assets in the interest of the general public. IVSC provides accreditation to companies but not to individuals.
  • The Royal Institute of Chartered Surveyors (RICS) regulates and promotes the profession. It maintains the highest educational and professional standards, protects clients and consumers via a strict code of ethics. It provides impartial advice and guidance. Valuers who are members of the RICS can append MRICS (Member of the Royal Institute of Chartered Surveyors) after their name. Having the title Registered Valuer of RICS shows that the RICS has provided further recognition of the valuer.
  • The American Society of Appraisers (ASA) in the United States trains professional appraisers who become members with a good grounding in the appraisal principles in many asset classes. The Machinery and Business Assets Professional Group is the professional association for the machinery and business assets sector that focuses on four main areas: standards, professional statements, market insights and regulatory issues.


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