Business Valuation focus has shifted from just the value of tangible assets to become more comprehensive. It also includes Earnings capability, Intangible assets, Innovative capabilities and Management capabilities which are now considered critical in the Valuation of any business. The inputs, risk factors and range of information which are used to calculate the final company Valuation based on their current circumstances has also evolved to become more robust and complete.

Business Valuation is an act or process of determining the value of a business enterprise or ownership interest therein which involves many assumptions and hence cannot be expected to provide a precise estimate of value. Valuation of business is a complex assignment which requires informed judgement and decision making.

The Institute of Chartered Accountants of India issued ICAI Valuation Standards 2018 and one of the standards is on Business Valuation. ICAI Valuation Standard -301 on Business Valuation describes the basic principles which govern the valuer’s professional responsibilities and which shall be complied with whenever an engagement to estimate value is carried out. It also prescribes usage of multiple methods in valuation instead of single method for better judgement and greater comfort in finalizing the valuation

As part of its continuous attempt towards knowledge dissemination, the Valuation Standards Board of ICAI jointly with the ICAI Registered Valuers Organisation (ICAI RVO) has brought out this Educational Material on ICAI Valuation Standard- 301, Business Valuation. The purpose of this Educational Material is to provide guidance by way of illustrations and Frequently Asked Questions (FAQs) explaining the principles enunciated in the Standard.

This Educational Material contains summary of ICAI Valuation Standard- 301 discussing the key requirements of the Standard in brief, Case Studies, Illustrations and the Frequently Asked Questions (FAQs) covering the issues, which are expected to be encountered frequently while implementing this Standard. The text of ICAI Valuation Standard- 301 has been included as an Appendix to make this publication comprehensive.

We may bring to the kind attention of the readers that the views expressed in this publication are the views of the Valuation Standards Board and are not necessarily the views of the Council of the Institute. The purpose of this publication is to provide guidance for implementing this ICAI Valuation Standard effectively by explaining the principles enunciated in the Standard with the help of examples. However, while applying Valuation Standards in a practical situation, reference should be made to the text of the Standard.

In this connection, we take this opportunity in thanking the President of ICAI CA. Atul Kumar Gupta and Vice President, CA. Nihar N. Jambusaria for their thought leadership and continued encouragement in bringing out the publication.

We would also like to convey our sincere thanks and gratitude towards the Board of ICAI RVO comprising of Shri Rajeev Kher, Chairman of the Board and other Directors, Shri Pawan Singh Tomar, Shri Ashok Haldia, Prof. Anil Saini, Shri Prafulla P. Chhajed and Shri Rakesh Sehgal for taking this joint initiative and to provide guidance on implementation of ICAI Valuation Standard 301- Business Valuation.

We also wish to place on record our appreciation to members of the Valuation Standards Board, Co-opted members and Special Invitees for their help and guidance in framing and bringing out this publication.

We, on behalf of the Valuation Standards Board, would like to put on record our appreciation to CA. T. V. Balasubramanian, CA. Parag Kulkarni, CA. Tarun Mahajan, CA. Janani Vijaykumar and CA. S. V. Mathangi for their contribution in developing this Educational Material.

We would like to thank CA. Sarika Singhal, Secretary, Valuation Standards Board and CEO Designate ICAI Registered Valuers Organisation, Ms. S. Rita, Deputy Secretary ICAI, Ms. Seema Jangid, CA Pragya Agrawal and CA. Vaishali Sharma for initiating this Educational material and for providing technical and administrative support in finalising the Educational Material.

We sincerely believe that this Educational Material will be of great help in understanding the requirements of ICAI Valuation Standard 301 and in implementation of the same.

CA. Pramod Jain
Chairman
Valuation Standards Board, ICAI

CA. Dheeraj Kumar Khandelwal
Vice-Chairman
Valuation Standards Board, ICAI

Date: 3rd February, 2021

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