Engaging a Registered Valuator (RV for short) when valuing businesses is becoming more and more natural, but what roles can an RV take on?
The Register Valuator (RV) is the specialist when it comes to a clear valuation. Register Valuators are affiliated with the Dutch Institute of Register Valuators (NiRV). This institute guarantees the quality of the valuator through intervision and mandatory continuing education.
A Register Valuator is used, among other things, to determine the value of a company. This is important when buying or sell a business. In addition, RVs are used for:
- Litigation: if a company has been aggrieved by an unlawful act of a third party, the RV can assess the damage suffered.
- Divorce: if the shares of a company are part of the marital community, the RV can determine the value.
- Business succession: if an entrepreneur transfers his shares to the next generation, the RV can assess the value, also for coordination with the tax authorities.
- Employee participations: if a company wants to bind employees to it by offering (certificates of) shares, the RV can assess the value of this.
- Buying out a co-shareholder: if one of the shareholders wants or needs to exit, the RV can play a role in determining the price at which this occurs.
- Death: if the heirs acquire shares the RV can assess the value for inheritance and income tax purposes.
- When bankruptcy is imminent: the RV can investigate viability and support in WHOA proceedings.
- Restructuring: if a company wishes to transfer assets to another company, the RV can assess the value for reporting purposes.
An RV can assume different roles: that of party expert, independent expert, binding adviser or judicial expert.
Party expert
When used as a party expert, the RV works on behalf of one party. The goal is to represent the interests of this party as well as possible. Here you can think of business acquisitions or when preparing a business for sale.
However, the RV can also provide support to one party in case of conflict. The RV works from the perspective of his client and ensures that the outcome for his client is as good as possible.
Independent expert
If an RV is employed as an independent expert, he provides a valuation from his own perspective and based on thorough research. Relevant parties (think of the management or key persons within a business) are heard and the RV studies the developments within the specific sector in which the business operates.
The RV then forms a picture of the expected cash flows and the risk profile of the company, and then comes up with an opinion on the value of the company. In some cases, adversarial hearings are used to give all parties (such as shareholders) the opportunity to share their views.
In this way, the independent expert makes an objective assessment of the value of a business. This role is chosen, among other things, when the offer obligation is deployed.
Binding adviser
The role of binding adviser is similar to that of independent expert, but with the addition that parties commit to the valuation outcome in advance. This role is chosen in cases of litigation or divorce, among others.
Judicial expert
If parties cannot agree on the value of a business or the amount of economic damages, the RV can be appointed as a judicial expert. This appointment is made by order of the court or tribunal.
The RV acts independently so that all parties have the opportunity to provide information. For the court, the RV's report is in many cases the basis for determining value or damages.
A versatile specialist
In short, the RV is used in various cases and the RV can take on various specialist roles. Which role this is, is always chosen in consultation with the client(s) and depends on the specific circumstances of the case. It is important that the chosen role is clear to all parties prior to the assignment.
