From PwC´s perspective, valuation is a quantitative process for determining the market value of an asset. For the purpose of valuation, we define market value in accordance with International Value Standards (IVS 104 – Bases of Value) as the estimated amount for which an asset or liability is likely to be exchanged for on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after correct marketing and where the parties both acted knowledgeably, prudently and not under duress.

The following three approaches are applied to independently assess a company´s estimated value:

The income approach determines the value of a company based on expected future cash flows. These cash flows are further discounted at a discount rate to take into account the time value of money and the risk related to creating of these cash flows.

The market approach determines the value of a company based on the prices of comparable publicly traded companies on the market, and on the analysis of statistics derived from transactions in the relevant industry and previous transactions related to the subject of the valuation.

The cost approach determines the market value of a company based on the difference between the market value of assets and liabilities or the market value of net assets. The approach is based on an itemised revaluation of components of the company´s assets and liabilities.

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