Valuation of a business in Poland
Every business has two basic values, a market and intrinsic value. The first one represents the likely selling price of the company in the case of a purchase-sale transaction. For companies listed on the regulated market this value is estimated by the market. For all other businesses, the intrinsic value needs to be determined. This shows the current situation of the company regardless of the preferences of stakeholders or investors. Valuation of intrinsic value is made based on a series of analyses including assessment of the environment, financial analysis, forecasting of future results and estimation of the cost of capital. There are many well-known company valuation methods, but not every one will properly indicate the value of the company. The science and business practice is based on two major approaches: property and income. The decisive criterion for choosing the appropriate valuation method is the assumption of going concern.
When is a business valuation required?
There are several reasons why information obtained from the valuation of a company may be required:
- entering into a transaction for the purchase/sale of a business or its organized part, sale of shares, exclusion of shares, acceptance of new shareholders, succession in family businesses, mergers, division of a company or its liquidation, or contribution of all or part of the enterprise as a contribution in kind. All these activities are subject to different types of taxation.
- The value obtained as a result of the company valuation may be used to calculate the basis for taxation of civil law transactions, inheritances and donations, and income tax. The subject of the taxed transaction may be an enterprise, its part or a share in the share capital. A reliable valuation by a specialist becomes significant when the market value of shares in the company deviates from their face value, especially in the case of long established enterprises or very rapidly developing enterprises that deal in modern technologies.
- A company may also require valuation for the purposes of its insurance, internal control of the owner or for the purposes of presenting the value of shares in other companies in the balance sheet.
Who can perform a business valuation?
- Polish law does not specify a particular entity that is authorized to perform a business valuation. However, due to the complex process of analysis and calculation, it is advisable to commission such a valuation to entities that have experience in this field. It is known from business practice that the calculations carried out by statutory auditors, as entities of public trust, are recognized by authorities and courts as credible.
- In 2015, a non-governmental organization was established under the name "Association of Certified Business Valuation Specialists in Poland (SBWPwP), which brings together specialists in the field of business valuation and helps them to improve their qualifications. The issue of valuation of fixed assets, such as for example real estate, is a different matter. Although it is often part of the valuation of an enterprise, only a property appraiser is legally entitled to make a reliable valuation.
Is the valuation of a business regulated by law?
Polish law does not provide for specific guidelines regulating the process of a company's valuation. However, one should not forget the existing regulations that regulate the functioning of business entities, i.e. the Code of Commercial Companies, the Accounting Act, the Bankruptcy Law or the Restructuring Law. In 2011, the Polish Federation of Valuers' Associations developed and adopted the National Specialist Valuation Standard: General Valuation Rules for Enterprises. The Association of Certified Business Valuation Specialists in Poland adopted this document and recommended it to its members.
BPG Polska Audyt sp. o.o. offers business valuation services. As an authorized statutory auditor the firm is a public trust entity, which means that its valuations are considered credible for the purposes of court cases and tax related matters. In addition, the firm has a team of experts and advisers that are available to support the valuation process