Business valuation for mergers and acquisitions in Russia

Abstract

Objectives The main objective of this study is to find out relevant issues of business valuation for conducting mergers and acquisitions in Russia and elaborate recommendations for increasing effectiveness of business amalgamation processes. In order to achieve this objective, there are specific milestones: to determine basics of mergers and acquisitions, to analyze patterns and models of business consolidation; to assess the role of valuation procedures in mergers and acquisitions; to identify special features of applying valuation procedures for conducting mergers and acquisitions in Russia; to analyze contemporary condition of the Russian market of M&A; to elaborate recommendations for organization of valuation procedures, choice of applied methods and procedures and also interpretation of obtained valuation results in conducting mergers and acquisitions. Summary The main focus of the research is on valuation procedures of M&A deals in the Russian market. The role of valuation is especially significant at the preliminary phase, the phase of determination of price and assessment of effectiveness of conducting a deal for an investor. The valuation procedures applied in Russia are considered to be imperfect enough. The factors impeding objective valuation do take place at the macro level and do not depend on any party participating in a deal as well as at the micro level when a certain party can have an impact on results of the valuation. Conclusions The recommendations elaborated in the thesis for business valuation are aimed at elimination of detected constraints and restrictions at the micro level, simultaneously taking into account macro level factors. The recommendations are to be conducive to surmounting identified challenges and obstacles of conducting valuation, determining reliable value of the business, assessing prospects of increase of value as a result of accomplishing a deal, and, consequently, augmenting effectiveness of conducting M&A deals in Russia.