Valtech Valuation team has recently been preparing valuation on equity class instruments for company undergoing listing process. Subject to listing rules and accounting standards, some equity class instruments including preference shares and restricted stock units are required to be valued and recorded on book on fair value. Usually there are multiple classes of preference shares and restricted stock units for pre-IPO company and the issuance of these equity class instruments would result in company’s financial liabilities and expenses. As the change in financial liabilities as well as expenses would hamper the profit, treatment on these equity classes would be pivotal considering sensitivity of profit in pre-IPO company.
The difficulty in valuation assessment on these equity class instruments would be the multiple near issuance dates. The company might issue equity class instruments on near dates with different offerings based on investor needs, yet conventionally company intrinsic value should not be differed a lot. Valtech Valuation team has successfully tackled the task and minimized the financial impact of the equity class instruments on book with company and auditor approval.