Businesses need valuing for a variety of different reasons

Businesses need valuing for a variety of different reasons

At PEM Corporate Finance, we can produce valuations for a wide range of purposes. It could be as part of exit strategy planning, for tax purposes, because of shareholder disputes, to implement employee share schemes, probate, due to divorce, or litigation.

A less commonly encountered reason is the requirement in Section 593 of the Companies Act for a quoted company to value an acquisition target where it’s issuing shares as part of the consideration.

Specifically, the requirement is for a valuation by an independent party of the non-cash consideration offered for shares to be allotted in a public company (s.593, Companies Act 2006). 

A report on the value must be made to the company within six months of the proposed allotment and sent to the proposed allottee (s.593, Companies Act 2006 replaced s.103, Companies Act 1985 on 1 October 2009).
 

Our recent s.593 experience

PEM Corporate Finance was recently engaged to provide such an opinion in connection with the acquisition by AIM-listed RhythmOne plc of the Canadian company Perk Inc. 

RhythmOne is a technology-enabled digital media company that connects online audiences with brands through premium content across devices. 

In the $42M all stock transaction, RhythmOne acquired Perk which operates mobile apps which let members earn “Perk Points” through activities including shopping, watching videos and playing social games.

Whilst most of the business of both companies is based in North America, the Cambridge connection is that RhythmOne, which was originally called Blinkx, was demerged from Cambridge-based Autonomy and listed on AIM.

We were delighted to work on this assignment and delivered the valuation report to a tight schedule to meet with timetable requirements of the transaction. 

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Lake Falconer

Corporate Finance Partner
Lake leads the PEM Corporate Finance team on MBO, acquisition, disposal, succession and strategic planning. He also heads up PEM’s valuation team providing business valuations for shareholder exits, disputes, business planning and regulation. Lake has over 30 years' senior level experience as a business adviser and as a manager in industry. He holds the ICAEW corporate finance qualification.