Valuation Report For Startups- Registered Valuer And Merchant Banker Valuation Report

    • Purpose of the Valuation
    • Registered Valuer and Merchant Banker Credentials
    • Valuation Methodologies
    • Financial Analysis
    • Industry and Market Analysis
    • Risk Assessment
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When you distribute equity or preference shares to investors, a valuation report for startups from a registered valuer and a merchant banker valuer is necessary. 

If you distribute the shares to international investors, a CA valuation report is necessary.

Reports on value come in two varieties.

  • According to the 2013 Companies Act, a registered valuer's valuation report is necessary before issuing equity shares, CCPS, or CCD.
  • A Merchant Banker's valuation report for income tax purposes
  • FCGPR requested a valuation analysis from a Chartered Accountant in order to raise money from a foreign investor.

You can get any kind of valuation report for startups in 4-5 business days. Especia delivers high-quality valuation reports at an affordable rate.

Over the next five years, projections for the balance sheet and profit and loss are required.

The Difference Between the Valuation Report for Startups



When is a Valuation report required under the Companies Act 2013?

A valuation report is necessary when a corporation distributes equity shares, preference shares, or CCD to any investor through a private placement.

When is the Valuation report required by a Merchant Banker?

According to the Income Tax Act, a Merchant Banker valuation is necessary when a firm issues equity shares, preference shares, or CCD to any investor for a premium.

When is a valuation report NOT required under the companies act 2013?

A valuation assessment is not necessary when the company offers equity shares to its current shareholders or to additional shareholders through a rights issue process.

Additionally, when a corporation raises money using convertible notes, a valuation report is not necessary.

When is a valuation report NOT required by a Merchant banker?

NAV occurs when the corporation issues equity shares at book value to current shareholders or new shareholders.

Additionally, when a corporation raises money using convertible notes, a valuation report is not necessary.

Who can issue valuation reports under the companies act 2013?

The valuation report can only be produced by a registered valuer who has registered with IBBI.

Who can issue a valuation report under the Income Tax Act 2013?

The value report can only be produced by a merchant banker who is registered with Sebi.

What is the cost and time to get the valuation report from a registered valuer?

The cost to receive the registered valuer report is Rs. 25000, and it takes four days.

What is the cost and time to get the valuation report from a merchant banker?

The cost to receive the registered valuer report is At Best Price and it takes 8 days.

Other Details of the Valuation Report

When issuing equity shares or preference shares under a private placement, a valuation report from a registered valuer and a report from a merchant banker is necessary. 

Reports on valuation are also necessary when businesses raise capital from international investors. Additionally required for converting CCD to equity is a valuation report.

What kind of report is required and when?

Valuation report under Companies Act 2013 under section 42 for private placement of shares – Valuation from a Registered valuer required:

According to Section 42, the offer letter must include the details of the valuer and the valuation report for any type of private placement. In this instance, the registered valuer's valuation report is necessary.

Under the Companies Act, the following conditions must be met in order to conduct a private placement:

"A company may not make an invitation or offer to subscribe to securities through a private placement for the purposes of subsections (2) and (3) of section 42 unless the proposal has first been approved by the company's shareholders, by a special resolution. For each of the offers or invitations:

As long as the following information is disclosed in the explanatory statement attached to the notice for shareholders' approval:

Information about the offer, such as the date the board decision was adopted, the categories of securities offered, and the price at which securities are being sold:

The justification or basis for the price (including any premium, if any) at which the invitation or offer is being made; the amount that the company intends to raise through the issuance of such securities; the name and address of the valuer who performed the valuation; the material terms of the issuance of such securities; the proposed timetable; the purposes or objects of the offer; and the contribution being made by the promoters or directors either as part of the offer or separately in fourth

Valuation report under the Income Tax Act

When a firm issues new shares or transfers existing shares, a Merchant Banker's valuation report is necessary for income tax reasons if the value is conducted using the DCF technique. 

Section 11UA of the act covers the regulations and specifics of value. A chartered accountant can provide the valuation if it is based on book value.

Valuation report for FCGPR filing under RBI when raising funds from foreign investors

A merchant banker or chartered accountant's valuation report is necessary for FEMA and for submitting FC GPR whenever fresh shares are offered to foreign investors, or shares are transferred from Indian residents to non-Indian citizens.

For your startup, we can help with the report preparation. In India, a valuation report for startups can be obtained in 7 business days. 

Costing Rs. 25000 for a registered valuer report and Rs. 75000 for a merchant banker report.

Type of Activity

Valuation report from registered valuer under the Companies Act 2013

Valuation report from Merchant Banker

Valuation report from a CA

Our comments

Raising of funds through private placement by Issuing Equity

Shares/preference shares

Yes, according to the 2013 Companies Act, this is necessary.

Yes, according to the Income Tax Act, this is necessary.

Not required

Startups typically just want a Registered Valuer report.

Raising of funds by issuing equity shares through a rights issue

Not required

In accordance with the income tax statute, yes. When using the NAV approach for valuation, it is not necessary.

Not required

The greatest method to reduce the cost of a valuation report is to do this.

Raising of funds through CCD, i.e. convertible debentures

If the CCD will be converted at the subsequent valuation date, it is not necessary.

Required if the conversion ratio was predetermined at the time the shares were issued.

No need to issue.

Required when CCD is converted to equity shares

Not required


Convertible Notes

At the time of issue, not necessary.

Required if convertible notes are converted into equity shares

At the time of issue, not necessary.

When convertible notes are converted into equity shares, it is necessary.

Not required

The business must be registered under the Start-up India programme, and the minimum amount that can be raised from one investor is 25 lakhs.

What kind of Report does a Startup need When Raising a Fund from Investors?

Instruments to be Issued

Registered Valuer Valuation report

Merchant Banker valuation report


Equity shares through Private Placement



Around 1.5 lahks for both report

Equity shares through a rights issue

Not required

Not necessary if a valuation is performed using the NAV technique


CCD (compulsorily convertible debentures)

if the conversion's minimum price has already been determined, necessary

Not required. Required only on conversion

Rs 40000 for 1 report

CCPS (compulsorily convertible preference shares)


Not needed. only necessary during conversion

Same as above 

Convertible notes

Not required

Not required


When Raising Funds, There Are 3 Authorities That can issue the Report

  • A report on valuation by a registered valuer under the 2013 Companies Act for issuing shares to investors
  • Income Tax Act Merchant Banker Valuation Report

We can help you put together the report you need to raise money.

Details Required to prepare the valuation report required under the Companies Act 2013 from a registered valuer:

  • A thorough explanation of the company's business strategy
  • What are the main threats to the company's business model? 
  • The Company's historical, audited financial statements for the previous two fiscal years.
  • Current financial accounts for the Company
  • The company's five-year financial predictions in MS Excel, including the income statement, balance sheet, and cash flow statement.
  • Justification of key forecast assumptions, including working capital, capex, and sales growth. 
  • Information about any earlier investments made in the business, along with the valuation study that served as the foundation for those investments.
  • The company's main rivals, both publicly traded and unlisted.
  • Information on any recent funding in related companies, if any. (Comparable business could be national or international)
  •  A term Sheet

No. A Merchant Banker report is unnecessary if you use a rights issue to issue shares to current shareholders. Tax authorities may still make an identical request.

The following details are required to generate a valuation report for a startup:

  • Business nature
  • names of comparable businesses
  • current financial data
  • Five-year forecasts
  • a method for making projections

No. A valuation report can only be used to support your valuation in court. The founders themselves must determine their worth and persuade the investors of the same.

When a start-up issues shares to investors, it is now required under the government's new laws to have the share valuation performed by a merchant banker. This will establish the fair value of the shares. According to the recent announcement, only merchant bankers are authorised to provide the valuation report. Previously, the CAs were permitted to issue the same.

There are different valuation models that can be used to value a company:

  • Net Asset Value: Using this approach, the whole assets are added, and the outstanding liabilities are deducted. This is the simplest and most fundamental method of valuation. Family-owned and offline enterprises where the importance of a brand name is minimal should use this strategy.
  • Discounted Cashflow Method: This method is used most frequently to value an asset. In this approach, projected future cash flows are taken into account while determining the valuation. The predictions, budgets, and cash flow for the following five years are prepared to go through this valuation.
  • Analysing comparable companies: Using this technique, a merchant banker valuer finds a firm that is comparable to yours and then performs a valuation. This approach is also frequently employed.

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