Business Valuation Services

Business valuation is the process of estimating what a business, its shares or its assets are worth on a given date, for a given purpose, using accepted methods such as discounted cash flow, market multiples or net assets. IMAK Advisory, an ICAI-registered CA firm in Bengaluru, provides business valuation services for fundraising, share transfers, foreign investment, ESOPs, tax, mergers and financial reporting for startups, private companies and families across India – and tells you at the start which kind of professional the law requires to sign each report.

A report is only as good as its purpose, method and assumptions. The same company can have different values for a share issue to a foreign investor, a gift of shares within a family and an internal decision to sell a division – and each has its own rules. This page explains when you need business valuation services, who can sign which report, what is DCF valuation, the main valuation formula for each method, valuation of securities, 409A valuation for startups with a US parent, investment valuation and stock valuation methods in the accounts, and the revaluation meaning in accounting, including the revaluation of assets and the revaluation journal entry.

• Share valuation for fundraising, share transfers and buy-backs
• Valuation under FEMA for foreign investment and transfers
• Income-tax fair market value reports for unquoted shares
• ESOP and startup valuation, and coordination of 409A valuation for US parents
• Valuation for mergers, demergers and business transfers
• Accounting support: investment valuation, impairment and revaluation

A business valuation is often treated as a formality – a certificate needed to complete a filing. In practice, a careful business valuation does more. It forces the owners to write down what drives the business, how fast it can grow and what could go wrong, and it gives investors, lenders and buyers a common basis for discussion. A weak report, on the other hand, can delay a funding round, invite questions from the bank or the tax department, or leave the seller with a price that ignores real assets.

• For founders: a business valuation sets expectations before negotiating with investors and shows which assumptions matter most
• For family businesses: a business valuation is the starting point for fair succession, buy-outs and settlements between branches of the family
• For buyers and sellers: it frames the price, the payment structure and the protections in the agreement
• For lenders: it supports security cover and the assessment of the business as a going concern
• For the accounts: it supports impairment testing, purchase price allocation and fair-value disclosures

The most useful business valuation is one whose assumptions you can defend line by line. We take time with management to understand the plan before building the model, and we explain the result in plain language: what the number depends on, what would change it, and how it compares with the recent history of the business.

Business valuation services are needed whenever shares or a business change hands, or the law, an investor or the accounts need a value. Each purpose has its own rules on method and on who signs.

Because the law names different professionals for different purposes, the first question in any engagement is: who must sign this report? A report signed by the wrong person can be rejected by the bank, the authorised dealer, the Registrar of Companies or the tax officer, even if the number is right.

As chartered accountants, we prepare FEMA valuation certificates, fair-value analyses for negotiation and accounts, and income-tax computations where an accountant's report is accepted. Where the Companies Act requires a registered valuer, or a regulation requires a merchant banker, the report is signed by an IBBI registered valuer or a SEBI-registered merchant banker; we prepare the financial analysis and coordinate, and tell you upfront who will sign.

Professionals group methods into three approaches. The right one depends on the business, the stage and the purpose; most reports use more than one and explain why one is given more weight.

What is DCF valuation? Discounted cash flow valuation estimates the value of a business as the present value of the cash it is expected to generate in the future. It is the most widely used income-approach method and is generally preferred for operating businesses with a credible business plan.

1. Prepare forecasts of revenue, costs, capital spending and working capital, usually for five years
2. Work out free cash flow for each year: operating profit after tax, plus depreciation, less capital spending and increase in working capital
3. Estimate the discount rate – the weighted average cost of capital for the business, reflecting the cost of equity and debt and the risk of the plan
4. Estimate the terminal value for the years after the forecast, usually by applying a long-term growth rate
5. Discount each year's cash flow and the terminal value to the valuation date
6. Add surplus assets such as excess cash and investments, and deduct debt, to arrive at the value of equity
7. Divide by the number of shares, after considering convertibles and options

A DCF model is sensitive to a few inputs – the growth rate, the margin and the discount rate – so a good report shows the effect of changing them. Tax officers and courts look closely at whether the forecasts were reasonable on the valuation date; projections prepared only to justify a price are a common source of disputes.

There is no single valuation formula; each method has its own. These are the formulas used most often in practice.

The income-tax valuation formula for unquoted equity shares is set out in Rule 57 of the Income-tax Rules, 2026 (Rule 11UA before 1 April 2026). It is used to test whether shares were received or sold below fair market value. It is a formula prescribed for tax, not a substitute for a negotiated or regulatory valuation.

Valuation of securities covers equity shares, preference shares, debentures, convertible instruments, warrants and options. Each instrument's terms – dividend or coupon, conversion ratio, redemption, liquidation preference, voting rights – change its value, so the work starts with a careful reading of the instrument and the shareholders' agreement.

• Equity shares: value of the business divided among equity shareholders, after adjusting for instruments that convert into equity
• Compulsorily convertible preference shares: usually valued on an as-if-converted basis, with any preference rights considered
• Debentures and bonds: present value of interest and principal at a market yield for similar risk
• Optionally convertible instruments: debt value plus the value of the conversion option
• Options and warrants: option pricing models such as Black-Scholes or binomial methods

Under FEMA, equity instruments issued to non-residents must be priced at not less than fair value, and instruments transferred from non-residents to residents at not more than fair value. For income tax, the valuation of securities other than equity shares generally follows the price they would fetch in the open market, supported by an accountant's or merchant banker's report.

Under the Income-tax Act, 2025, when a person receives unquoted shares for less than their fair market value, the difference can be taxed in the recipient's hands (section 92, formerly section 56(2)(x)); and when unquoted shares are sold for less than their fair market value, the fair market value can be treated as the sale consideration (section 79, formerly section 50CA). Fair market value is worked out under Rule 57 of the Income-tax Rules, 2026.

The angel tax on share premium received by companies was abolished from assessment year 2025-26, so fresh issues to investors are no longer tested under that provision. Transfers between shareholders, gifts and family restructurings still need a fair market value computation. Keep the report with the transaction records, since questions often arrive years later.

When an Indian company issues shares to a non-resident, or shares are transferred between residents and non-residents, the price must follow the pricing guidelines in the FEMA Non-Debt Instruments Rules, 2019. For unlisted companies, fair value is worked out using an internationally accepted pricing methodology and certified by a chartered accountant, a SEBI-registered merchant banker or a practising cost accountant (for transfers from non-residents to residents, by a chartered accountant or merchant banker). The report should not be more than 90 days old on the date of issue or transfer, and it is filed with the authorised dealer bank as part of the reporting.

• Issue to a non-resident: price not less than fair value
• Transfer from a resident to a non-resident: price not less than fair value
• Transfer from a non-resident to a resident: price not more than fair value
• Reporting through the FIRMS portal within the prescribed time

Section 247 of the Companies Act requires valuations under the Act to be done by a registered valuer – an individual or entity registered with the Insolvency and Bankruptcy Board of India for the relevant asset class. The common cases for private companies are preferential allotment of shares, sweat equity, shares issued for non-cash consideration, and schemes of merger, demerger or arrangement. The registered valuer is appointed by the audit committee or, where there is none, the board.

We prepare the financial analysis, projections and supporting information that the registered valuer needs, and coordinate the work so that the Companies Act report, the FEMA certificate and the tax computation for the same transaction are consistent.

Startups often have no profits and limited history, so methods based on recent funding rounds, scenario-based DCF and market multiples are used together. Each new round, ESOP grant or secondary sale needs a price consistent with the last one, or a clear reason why it changed.

For ESOPs, the value matters twice: once for the exercise price and any regulatory requirement, and again for the accounts, where share-based payments are measured at grant-date fair value. A consistent record of values makes investor due diligence much easier.

409A Valuation for Startups With a US Parent

A 409A valuation is an independent appraisal of the fair market value of a US company's common stock, required under section 409A of the US Internal Revenue Code before granting stock options, so that options are not treated as deferred compensation with tax penalties for employees. Indian founders who have "flipped" to a US holding company, with an Indian subsidiary, usually need a 409A valuation for the US parent's option grants.

A 409A valuation is a US requirement and is normally prepared by an independent US valuation firm. We do not issue 409A reports. What we do is prepare the Indian subsidiary's financial information for the 409A valuation provider, and handle the Indian side: FEMA and income-tax valuations for the Indian entity, transfer pricing between the parent and subsidiary, and the tax treatment of US options granted to employees in India.

In a sale or merger, business valuation supports the price negotiation, the share exchange ratio, the purchase price allocation in the buyer's accounts, and the tax position of both sides. A buyer usually commissions due diligence alongside, because the value depends on what the diligence finds – contingent tax liabilities, related-party arrangements, working capital adjustments.

Investment valuation in the accounts means measuring the investments a business holds – shares, mutual funds, bonds – at the amount the accounting standards require. Companies following the other accounting standards apply AS 13: current investments are carried at the lower of cost and fair value, and long-term investments at cost, less any decline in value that is other than temporary. Companies following Ind AS apply Ind AS 109: investments are measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss, depending on their nature and the business model.

Investment valuation can also mean valuing an investment opportunity – a startup round, a property or a business you are considering buying – using expected returns, risk and exit value. For investors, we prepare independent views of value and the main risks before a commitment is made.

Stock valuation methods usually refer to the valuation of inventory – raw materials, work in progress and finished goods – in the accounts. Under AS 2 and Ind AS 2, inventory is measured at the lower of cost and net realisable value. Cost can be worked out by first-in first-out (FIFO) or weighted average cost; specific identification is used for items that are not interchangeable; standard cost and the retail method are allowed as approximations. Last-in first-out (LIFO) is not permitted.

The same phrase, stock valuation methods, is also used for the valuation of shares, covered above under valuation of securities. For inventory, the method must be applied consistently and disclosed, and it must match the method used in the tax return and the tax audit report.

The revaluation meaning in accounting is the restatement of an asset's carrying amount to its fair value on a particular date, instead of carrying it at cost less depreciation. Under AS 10 and Ind AS 16, a business may choose the revaluation model for a whole class of property, plant and equipment – for example, all land and buildings – and must then keep the revaluations up to date so that the carrying amount does not differ materially from fair value.

Revaluation of Assets: Rules to Follow

• Revalue the whole class of assets, not selected items
• Use a competent valuer and keep the valuation report
• Credit an increase to revaluation surplus (other comprehensive income under Ind AS), unless it reverses an earlier decrease charged to profit and loss
• Charge a decrease to profit and loss, unless it reverses an earlier surplus for the same asset
• Depreciate the revalued amount over the remaining life
• Remember that revaluation surplus is not available for dividends and is not taxable income; depreciation for tax stays on the tax written-down value

The revaluation of assets is common before raising loans against property, before a merger, or when book values are far below market values. It improves the balance sheet's presentation, but it does not create cash or profit, and banks and investors look through it.

Revaluation Journal Entry

The revaluation journal entry depends on whether the asset value goes up or down. For a company using the revaluation model:

In partnership accounts, the revaluation journal entry is passed through a revaluation account when a partner is admitted, retires or dies. Increases in assets and decreases in liabilities are credited to the revaluation account; decreases in assets and increases in liabilities are debited. The resulting profit or loss is transferred to the old partners' capital accounts in their old profit-sharing ratio.

• Audited financial statements for the last three years and latest management accounts
• Business plan and projections, with the assumptions behind them
• Shareholding pattern, cap table and terms of all instruments
• Shareholders' agreement and details of recent funding rounds or transfers
• Details of surplus assets, contingent liabilities and related-party arrangements
• Purpose of the valuation, the valuation date and who will rely on the report

1. Understand the purpose, valuation date and who will rely on the report
2. Confirm who must sign: chartered accountant, registered valuer or merchant banker
3. Collect information and discuss the business plan with management
4. Choose methods and test assumptions against history and peers
5. Prepare the analysis and a draft for discussion of facts, not of the number
6. Finalise the report or certificate in line with the applicable standards
7. Align any related FEMA, Companies Act and tax filings
8. Keep working papers for later questions from banks, auditors or tax officers

Our value is independent. We do not agree to reach a target number, and we decline engagements where the price has been fixed and the valuation is expected to match it.

We do not publish fees. The cost depends on the purpose, the number of entities and instruments, the methods needed, the quality of the projections, and whether a registered valuer or merchant banker must sign. Our team shares the exact total after reviewing your requirements.

A Startup Raising From a Foreign Investor

A Bengaluru software company agreed a price with an investor in Singapore. A FEMA valuation using DCF and the recent round confirmed the agreed price was above fair value. Because the issue was a preferential allotment, a registered valuer's report under the Companies Act was also obtained, and the two reports were aligned before the board approved the allotment.

A Family Moving Shares Between Generations

Parents planned to transfer shares in the family company to their children. A fair market value computation under the income-tax rules was prepared, the tax position of gifts between relatives was confirmed, and the transfer documents and register entries were completed.

A Manufacturer Revaluing Its Land

A company's factory land was recorded at a value from decades ago. Before a bank loan renewal, it adopted the revaluation model for land, obtained a valuation from a registered valuer, passed the revaluation journal entry to revaluation surplus, and explained in the notes that the surplus was not distributable.

• Getting a business valuation signed by the wrong professional for the purpose
• Using a valuation more than 90 days old for a FEMA transaction
• Projections that ignore the company's own history
• Different values for the same date in the FEMA, Companies Act and tax reports without explanation
• Ignoring convertible instruments and options when calculating value per share
• Treating a revaluation surplus as profit or as available for dividends
• Changing inventory methods without disclosure

Loss-Making and Early-Stage Companies

Where there are no profits, methods based on recent rounds, scenario-weighted DCF and revenue multiples are used, with clear disclosure of the uncertainty.

Holding and Investment Companies

The net asset value method, with investments at fair value, is often more suitable than DCF.

Disputes Between Shareholders

Valuations for exits under shareholders' agreements or disputes need careful attention to the agreement's definitions and to any discounts for minority holdings; legal advice is taken where needed.

Buy-Backs and Capital Reduction

When a private company buys back its own shares, the price, the source of funds and the limits under the Companies Act must be checked, and the tax treatment of buy-back proceeds in shareholders' hands, which has changed more than once in recent years, must be checked for the year of the buy-back. The board and shareholders should see a reasoned price before approving the offer, and the offer letter, declaration of solvency and return of buy-back must be filed within the prescribed time. Where some shareholders are non-residents, FEMA pricing rules also apply to their portion.

Intangible Assets

Brands, software and customer relationships are valued using relief-from-royalty, excess earnings or cost methods, often for purchase price allocation or licensing.

• We do not sign Companies Act valuations unless signed by an IBBI registered valuer, or merchant-banker reports unless signed by a SEBI-registered merchant banker
• We do not issue US 409A valuation reports
• We do not work backwards from a target number
• We do not value assets such as land and buildings ourselves; for property we work with registered valuers in that class
• We do not guarantee that a buyer, investor or tax officer will accept a value

If two unrelated Indian residents agree a price for a private company's shares and no tax, FEMA or Companies Act rule applies, a formal report may not be required – although a simple fair market value computation is still prudent. For a one-time internal estimate, a reasonable range based on comparable deals may be enough. We will tell you when a full report is not needed.

1. What is the valuation for, and who will rely on it?
2. What is the valuation date?
3. Is any party a non-resident?
4. Is it a fresh issue, a transfer, a buy-back, a merger or an accounting need?
5. Are there convertible instruments or options outstanding?
6. Are projections available, and who prepared them?
7. Are there surplus assets or unusual liabilities?

These assignments use business plans, investor terms and family arrangements that are highly confidential. As chartered accountants we follow ICAI's confidentiality rules. Information is used only for the assignment, shared only with the team and any co-signing registered valuer you approve, and stored securely.

• Purpose and valuation date fixed
• Signing professional confirmed
• Financial statements and projections ready
• Cap table and instrument terms collected
• Methods agreed and assumptions documented
• Related FEMA, Companies Act and tax requirements identified
• Report dated within the validity period for the transaction
• Working papers retained

Our only office is in Whitefield, Bengaluru, where clients can meet us in person. Business valuation work is done with clients in any state through shared documents and meetings. We do not have offices outside Bengaluru.

What are business valuation services?

Business valuation services estimate the value of a business, its shares or assets on a given date for a given purpose – fundraising, share transfers, FEMA, tax, ESOPs, mergers or financial reporting – using accepted methods and standards.

Who can do a valuation in India?

It depends on the purpose. Companies Act valuations need an IBBI registered valuer; FEMA valuations can be done by a chartered accountant, SEBI-registered merchant banker or practising cost accountant; income-tax values follow the prescribed rules.

What is DCF valuation?

DCF valuation values a business as the present value of its expected future free cash flows, discounted at a rate reflecting the risk, plus a terminal value for the years after the forecast period.

Is there a single valuation formula?

No. Each method has its own valuation formula – DCF, net asset value, P/E and EV/EBITDA multiples – and the income-tax rules prescribe a separate formula for unquoted equity shares.

What is valuation of securities?

Valuation of securities is the valuation of shares, preference shares, debentures, convertibles and options, taking into account each instrument's rights, conversion terms and risk.

What is a 409A valuation?

A 409A valuation is an independent appraisal of a US company's common stock required under section 409A of the US tax code before granting stock options. It is relevant to Indian startups with a US parent and is prepared by US valuation firms; we handle the Indian side.

What is investment valuation in accounting?

It is the measurement of investments held in the accounts: under AS 13, current investments at the lower of cost and fair value and long-term investments at cost less permanent decline; under Ind AS 109, at amortised cost or fair value depending on classification.

What are stock valuation methods?

For inventory: FIFO, weighted average, specific identification, standard cost and the retail method, with inventory at the lower of cost and net realisable value. LIFO is not permitted in India.

What is the revaluation meaning in accounting?

Revaluation means restating an asset's carrying amount to its fair value on a date, under the revaluation model of AS 10 or Ind AS 16, applied to a whole class of assets and kept up to date.

How is the revaluation of assets recorded?

An increase goes to revaluation surplus, unless it reverses an earlier decrease charged to profit and loss; a decrease goes to profit and loss, unless it reverses an earlier surplus for the same asset.

What is the revaluation journal entry for an increase in land value?

Debit Land and credit Revaluation Surplus (revaluation reserve). In partnership accounts, the increase is credited to the Revaluation Account and later transferred to partners' capital accounts.

How long is a FEMA valuation report valid?

It should generally not be more than 90 days old on the date of issue or transfer of the shares.

Is a valuation needed for a share transfer between residents?

For income tax, a fair market value computation under Rule 57 is needed to check whether the price is below fair value, which can create tax for the buyer or seller.

Can a valuation be done for a loss-making startup?

Yes, using recent funding rounds, scenario-weighted DCF and revenue multiples, with the uncertainty clearly disclosed.

How long does a business valuation take?

Usually two to four weeks from receiving complete information, longer if a registered valuer or merchant banker is also involved.

How much do business valuation services cost?

We do not publish fees. The cost depends on the purpose, instruments, methods and who must sign, and our team shares the exact total after reviewing your requirements.

FEMA and FDI Compliance · Due Diligence · Mergers and Acquisitions · Startup Advisory · Tax Planning · Financial Statements and MIS

Share the purpose of the valuation, the valuation date, the latest financial statements and the cap table. Our team will confirm who must sign the report, the methods likely to apply and the information needed.

Contact Details

Office Address

IMAK Advisory, ITPL Main Rd, Pattandur Agrahara, Whitefield, Bengaluru, Karnataka 560066, India

Phone

+91 79798 50684 (call or WhatsApp)

Email

imakadvisoryteam@gmail.com

Sources: Companies Act, 2013 (section 247); FEMA (Non-Debt Instruments) Rules, 2019 pricing guidelines (Taxmann summary); Income-tax Act, 2025 and Income-tax Rules, 2026, Rule 57 (as summarised by Calcguru); AS 2, AS 10, AS 13, Ind AS 2, Ind AS 16, Ind AS 109; ICAI Valuation Standards; US Internal Revenue Code section 409A. Checked 2 November 2026.