Assessment of corporate rights of the enterprise

1. What are corporate rights?
2. Why conduct an assessment of corporate rights?
3. How is the value of corporate rights determined?
4. What assessment methods are used?

What are corporate rights?

Corporate rights are rights granted to a person as a result of the fact of owning a share in the company’s authorized capital.

They include:

• the right to own the enterprise
• the right to profit
• the right to receive the company’s assets after its liquidation
• the rights of a person provided for in the company’s statutory documents

Today, the service of evaluating the corporate rights of an enterprise is relevant in various cases related to management decisions. For example, in the situation of the sale of shares by one of the founders, reorganization of the enterprise or court cases.

Why conduct an assessment of corporate rights?

Such an assessment is used to determine the value of the share of one of the founders of the entire business in general. This is due to the rapid development of the sphere of buying and selling ready-made businesses.

Since corporate rights can act as an object of sale, pledge, or donation, the real value of the corresponding object must be indicated in such agreements.

During the assessment, not only the value of corporate rights is calculated, but also the state of the industry and the market as a whole is analyzed.

This will provide an opportunity not only to objectively and accurately assess the company’s capabilities but also the level of interest from investors.

How is the value of corporate rights determined?

There are several calculation methods. This includes several valuation procedures: valuation of property complexes, unfinished construction, valuation of equipment and machinery, vehicles, securities, valuation of intangible assets, real estate, and land plots.

Here it is worth clearly remembering that not only everything that is on the company’s balance sheet, but also receivables and payables are taken into account for the formation of reporting on the value of the company.

The following documents are required for the evaluation:

• Tax registration certificate.
• Extract from the register of legal entities.
• Regulations.
• Annual accounting reports for 3-5 years.
• Balance sheets on the main resources.

The expert may ask to provide other documents after reviewing the case (for example, a business plan or data about your product or service).

The expert assesses by national assessment standards and analyzes the data and the object. The cost will depend on the complexity of the object of assessment and the promptness of the provision of initial data by the customer.

What assessment methods are used?

• The first method –  is profitable. The assessment is carried out based on the actual and projected revenues of the enterprise.
• The second method – is expendable The valuation is based on the company’s costs, which are subsequently deducted from the value of all assets.
• The third method – is comparative. The expert conducts an analysis of similar companies on the market and their corporate rights, and based on statistical data derives the final value.

The evaluation report provided by the expert is valid for the period specified in the report, but not longer than six months from the date of signing the report. The owner of corporate rights or his authorized representative can order such a report.

The cost of evaluating corporate rights directly depends on the characteristics of the enterprise: its structure, the amount of property on the balance sheet, and documentation. The labor intensity and complexity of the process depend on these factors.

Therefore, this service has no fixed cost. The legal company “Prikhodko and Partners” is ready to get acquainted with your case, estimate the cost of this service for you, and provide a qualitative opinion regarding the assessment of the corporate rights of your enterprise.