Business Valuation in Malaysia

When you need a valuation

Most owners come to us at a moment when a number has to be agreed with someone whose interests are opposed to theirs. That is exactly when an internal estimate stops being enough.

• A shareholder joining or leaving. Pricing a share issue to a new investor, or buying out a departing partner, without the deal collapsing into an argument.
• Share transfers. Transfers of shares in a private company require a supportable value for stamping purposes — an arbitrary figure invites a query.
• Succession and estate planning. Passing a family business to the next generation, or dividing it fairly among children where only some are in the business.
• Selling the business. Knowing your floor before a buyer opens, rather than discovering it during negotiation.
• Bank financing. Supporting a facility application where the lender wants an independent view of the business, not just the management accounts.
• Disputes. Shareholder disagreements, divorce, and partnership separations, where both sides need a basis they can argue from.
• Financial reporting. Purchase price allocation and impairment testing where the accounting standards require a measured value.

How we arrive at the number

There is no single correct method, and anyone who applies one formula to every business is selling you a template. We work through three standard approaches and weight them according to what the business actually is.

Income approach

Discounted cash flow, or capitalisation of maintainable earnings. Appropriate where the business has a track record and reasonably predictable trading. The work is in normalising the earnings — stripping out the owner's personal expenses, one-off items, related-party charges and above- or below-market director remuneration — because the reported profit of an owner-managed company rarely reflects its true earning power.

Market approach

Comparable company and transaction multiples, adjusted for size, growth and the discount that attaches to an unlisted, illiquid shareholding. Useful as a sense check even where it is not the primary method.

Asset approach

Net asset or net realisable value. The right basis for asset-holding and investment companies, for businesses being wound down, and often the starting point where a business is loss-making.

Minority and control

A 20% shareholding is not worth 20% of the whole company. A minority holder cannot force a dividend, a sale or a change of direction, and the value reflects that — usually through a minority discount, and a further discount for the absence of a market to sell into. Conversely a buyer acquiring control may pay a premium. Getting this wrong is the single most common flaw we see in valuations prepared without professional input, and it usually favours whichever side drafted it.

What you receive

A written valuation report setting out the purpose and basis of valuation, the information we relied on, the normalisation adjustments made and why, the methods applied and their weighting, a sensitivity analysis showing how the value moves with the key assumptions, and a concluded value or range.

The report is written to be read by someone who was not in the room — a bank, a buyer's adviser, the other side's accountant — because that is usually where it ends up.

Working with your other advisers

Valuation rarely sits on its own. A share transfer needs the secretarial filings done properly; a sale has tax consequences that are much cheaper to plan before the structure is fixed than after; and a transaction usually needs deal support alongside. We work with your lawyer and, where there is one, your banker.

This page covers the valuation of businesses and shareholdings. Valuation of land and buildings is a separate discipline carried out by registered property valuers; where real property is a significant part of the value, we will say so and work alongside a registered valuer.