Transfer Pricing
Business and Asset Valuation
ALS provides fiscal and financial valuations of businesses, business lines, intangibles and economic damages. We apply OECD-recognised methodologies with the technical rigour required by tax regulations and dispute resolution forums worldwide.
Valuation scope
We value shareholdings in unlisted entities for related-party transfers, shareholder exits, non-cash contributions and any transaction requiring arm's length value to be demonstrated to the tax authorities.
We value distinct business units in demergers, mergers and contributions covered by tax neutrality regimes, determining the share exchange ratio and substantiating the absence of an exclusively tax-driven motive.
We determine the market value of brands, software, patents, know-how, goodwill and image rights for related-party transactions, licence arrangements and restructurings, applying the approaches recognised by the OECD Guidelines.
We quantify economic loss in domestic and international commercial litigation and arbitration, projecting the flows the injured party would have generated in the absence of the damage and estimating costs directly attributable to the breach.
We value loans, guarantees, cash pooling arrangements and derivatives between related parties, determining the arm's length price in accordance with the methodologies recognised by the OECD Guidelines and applicable tax rules.
In transfers of assets, functions or risks between group entities, we value the transferred elements to demonstrate that the consideration is at arm's length and that no taxable base exits the group without adequate compensation.
OECD-recognised methodologies
We select the most appropriate methodology based on the type of asset, the purpose of the valuation and the information available. The OECD Guidelines and international standards (IVS, RICS) guide both the choice of method and the documentation of the analysis.
Discounted cash flow (DCF)
We project the free cash flows of the asset or business and discount them at a rate that incorporates the cost of capital and specific risk. This method is particularly suited to businesses with verifiable projections and to intangibles with identifiable royalty streams.
Transaction and trading multiples
We apply valuation multiples derived from comparable transactions or listed sector peers — EV/EBITDA, EV/Revenue, P/E — adjusted for differences in size, liquidity, risk and growth prospects between the subject and the comparables.
Substantial and net asset value
For assets whose primary reference is net assets adjusted to market value — real estate, financial portfolios, holding companies — we determine the value of the underlying assets and liabilities through individual appraisals and valuations of each component.
How an ALS valuation is used
The same valuation engagement can serve fiscal, corporate or litigation purposes. ALS prepares the report with the level of rigour, documentation and format that each context of use demands.
Tax compliance and related-party transactions
Shareholding transfers, intragroup financing arrangements and restructurings where tax rules require arm's length value to be demonstrated to the tax authority. The report supports the taxpayer's filing and reduces exposure to valuation adjustments on audit.
M&A support and transaction advisory
Business valuations for sale and acquisition processes, price negotiation, buyer or vendor due diligence, and fairness opinions in transactions requiring the equity consideration to be shown as fair to shareholders.
Expert evidence in litigation and arbitration
Valuation and damage quantification reports meeting evidentiary standards for court proceedings and international arbitrations (ICC, ICSID, UNCITRAL). We include counterfactual analysis and sensitivity of outcomes to key assumptions.
How we conduct a valuation
Defining the engagement and scope
We agree on the asset or business to be valued, the purpose of the report, the reference date and the applicable standards. This phase determines the primary methodology, the cross-check analyses and the delivery format.
Information gathering and analysis
We request historical financial statements, business projections, relevant contracts and sector data. We identify the key assumptions and assess the consistency and reliability of the data underpinning the model.
Modelling and cross-checks
We build the valuation model, apply the primary methodology and the cross-check methods, conduct sensitivity analysis and compare the result against market references to verify its reasonableness.
Technical valuation report
We deliver the report setting out the assumptions, methodology, model and valuation conclusion, drafted to the technical standard and format appropriate for submission to the tax authority, a court, an arbitrator or as support for a transaction.
FAQs
Frequently asked questions
What is the difference between a fiscal valuation and a financial valuation?
A fiscal valuation is carried out to determine the tax base of a transaction subject to tax rules — transfers of shareholdings, related-party transactions, non-cash contributions or restructurings — and must conform to the criteria the tax authority accepts as arm's length. A financial valuation serves a corporate or market purpose: mergers and acquisitions, financing, litigation or due diligence. In many cases the same report can serve both purposes, but the validation criteria, format and depth of analysis differ depending on the primary use.
What valuation method does the OECD recommend for intangible assets?
The OECD Guidelines recognise several approaches to valuing intangibles in a transfer pricing context. The income approach — particularly the multi-period excess earnings method and the relief-from-royalty method — is the most widely applied because it directly captures the economic benefit attributable to the intangible. The cost approach and the comparable transactions approach are used where market data supports them. The choice of method depends on the nature of the intangible, the purpose of the valuation and the availability of comparable information.
What is the purpose of valuing a business line in a demerger?
In demergers and contributions of business lines covered by tax neutrality regimes, the valuation serves several functions: it demonstrates that the transfer is carried out at a reasonable market value, substantiates that there is no exclusively tax-driven motive and determines the share exchange ratio between the participating entities. A technically robust valuation report is the primary element that mitigates the risk of the tax authority challenging the application of the neutrality regime.
What are lost profits and how are they quantified?
Lost profits are the gains a party fails to obtain as a direct result of a contractual breach, damage or unlawful conduct. Their quantification requires constructing a counterfactual scenario — what would have happened in the absence of the damage — and projecting the profit flows the injured party would have generated. The methodology must be accepted by the competent court or arbitrator and grounded in historical data, verifiable projections and sector benchmarks.
Can an ALS report be used as expert evidence in international arbitration?
Yes. We prepare expert valuation reports to the standard of rigour required by the principal international arbitration rules, including ICC, ICSID and UNCITRAL. The report incorporates the analysis of relevant facts, the methodology applied, the assumptions and their basis, sensitivity analysis and the valuation conclusions, all in the format required by the procedural rules of the leading arbitration centres.
How long does a business valuation take?
The timeframe depends on the complexity of the business, the number of methodologies applied and the availability of information. A mid-market company valuation using DCF methodology and multiples cross-checks can typically be completed within three to six weeks from the date audited financial statements, projections and the necessary business information are available. Engagements involving multinational groups, regulated sectors, litigation with significant counterfactual analysis or complex intangible valuations require longer timeframes.
ALS Transfer Pricing
Ask ALS about the right approach for your valuation. We respond with technical judgement and no strings attached.