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Valuation Advisory

A business valuation is a general process of determining the economic value of a whole business or company unit. Business valuation can be used to determine the fair value of a business for a variety of reasons, including sale value, establishing partner ownership, taxation, share valuation etc.

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Legal Provisions On Valuation

Following are the provisions under various laws which talks about valuation while issuance of fresh shares –

Under Companies Act 2013 (w.e.f. 1st Feb 2019)

Section 247 provides that for the purpose of valuation of shares under the Companies Act 2013, only a report issued and signed by a registered valuer shall be acceptable under this law.

Under Income Tax Act 1961 (w.e.f. 24th May 2018)

Section 56 provides that for the purpose of arriving at the fair value of shares, only a merchant banker report shall be allowed.

Under FEMA Regulation

The fair value of shares needs to be duly certified by a CA or a SEBI registered merchant banker.

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Why valuation for Start-Ups?

We have significant valuation expertise and experience that enable effective and comprehensive valuation services. Valuation requires an understanding of business opportunities and risks. Our thorough research and analysis, expertise and experience enable us to evaluate client’s business’s specific opportunities and risks and management’s abilities to manage them, which is a critical valuation driver. Startup Movers can help you in Valuation Advisory.
Valuation matters to every start-up because it helps in deciding the amount of equity an entrepreneur has to give to an investor in exchange for requisite funds. This implies that if a company has a higher valuation, it has to give a lesser amount of equity or shares to an investor in exchange for seed investment. Not only for entrepreneurs, but start-up valuation is also vital from investors’ point of view because it helps them gauge the amount of return, they will receive on their invested amount.


In the current scenario, to comply with 3 prevailing laws affecting such valuation, a company will be required to get a separate valuation report from Merchant Banker & Registered Valuer.

 1. The company is a start-up recognized by DPIT under Start-up India

 2. Has applied for Angel Tax Exemption under section 56 of income tax and has file duly signed declaration to DIPP that it fulfils the conditions after which DPIIT shall forward the same to the CBDT.

How can Startup Movers assist you in valuation?

Any person who would like to avail the following advantages may opt for this form of structure

  • Assistance in formalizing the projections for the
  • Study the industry in which the organization
  • Analysis of the projections/ business plan; and discussions with management to gather clarity around the
  • Selection of appropriate approach(es) and methods to be used for valuation based on above (DCF under Income approach is the most suitable method of valuation for startups)
  • Identify the risk-free rate as on the valuation
  • Identifying multiples, and computing value
  • Value conclusion
  • Submission of Draft Valuation Report and discussion thereupon
  • Issuance of Final Report

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