Appraising of securities is a procedure for establishment of the market price of a wide variety of securities. A unique feature of the appraised objects in this case is that securities are one of the types of existence of capital, and, at the same time, securities are a commodity in circulation in a specialized stock market. Securities are not a commodity in the material form, their value is determined by the value of the rights belonging to its owner.
The value of the securities is not equivalent to their price, as the value is calculated and represents the opinion of a professional appraiser, and the price is a fixed condition of transaction. However, price is considered to be a monetary expression of value. The value of securities is established upon issue, as the amount of funds spent on the issue and placement of securities; upon acquisition, as the estimated income from future circulation; and when converting, based on the cost of replacement.
The situations when the appraising of securities is required:
Securities are a special form of financial assets and liabilities of an enterprise. Appraising of these investments give you opportunity to determine not only the market value of the securities, but their investment potential. Most often, the appraising of securities is made in the following cases:
- Before consummation of the transaction for the purchase or sale of securities.
- For registration of the procedure for inclusion of securities in the share capital of the organization.
- For determination of the value of the assets of an enterprise or an individual before processing a loan against the security of available securities.
- If it is necessary to establish the market value of a business or enterprise, as well as assets held by the organization.
The main objectives of the appraising of securities:
Appraising of securities is associated with various tasks of the emitent, buyer, investor or professional market participant. Based on the appraising, certain economic, managerial and investment decisions are made on the securities market and in the production life of the business (enterprise). There are the following main objectives of the appraising of securities:
- Establishment of the share value of securities in the authorized capital.
- Establishment of liabilities and property rights in relation to securities.
- Determination of the value of the full package of securities (including 100% of the emission).
- Establishment of the collateral value of securities for obtaining a loan.
- Determination of the share of securities in the total value of an enterprise or business as a property complex.
- Determination of the current value of financial assets.
- Comparative analysis of the value of securities and other investment alternatives for financial investments.
In most cases, the appraising of securities is inseparable from the appraising of the enterprise or business appraising, however, there are cases when it is necessary to evaluate small blocks of shares less than five percent of the authorized capital of an organization. In this case, a separate appraising can be conducted and its procedure is greatly simplified.
The following types of securities issued by organizations and enterprises, financial institutions (banks, commodity exchanges) or government bodies are subject to assessment:
- Equity securities, i.e. stocks (ordinary or preferred).
- Derivatives - futures, options, etc.
- Debt securities - ineligible bills or bonds.
ROVEX Appraisal Company has a large staff of qualified appraisers with substantive experience in appraising the value of financial instruments and securities, so you can be sure that by contacting us you will get an absolutely accurate and reasonable appraisal report.
The cost of expert appraising services will depend on such investment characteristics of securities as reliability, profitability and degree of liquidity; thus, it is negotiated for each deal individually.