Financial instrument valuation your auditor can sign off first time.
VALLARIS™ measures the fair value of convertible notes, preference shares, warrants and options, earn-outs and contingent consideration, loans and guarantees, for financial reporting, deals and disputes.
What is financial instrument valuation?
Financial instrument valuation measures the fair value of instruments that have no quoted price, such as convertible notes, preference shares, warrants, earn-outs and intercompany loans. It is required under IFRS 9 and IFRS 13 (SFRS(I) 9 and SFRS(I) 13 in Singapore), and uses option pricing, binomial lattice and Monte Carlo models chosen to match each instrument’s terms.
The moments this work is for.
Year-end is coming
The auditor wants support for the fair value of a Level 3 instrument. You want it before the field work starts.
You issued or bought a complex instrument
A convertible, a preference share or a warrant needs to be split and measured on day one.
A deal has an earn-out
Contingent consideration has to be measured at acquisition and at every reporting date after.
The work, and what it delivers.
- Classification supportWhether each feature is equity, liability or an embedded derivative.
- Fair value at each dateA model matched to the instrument’s terms, with inputs explained.
- Fair value hierarchyThe level, the key inputs and the sensitivity disclosures.
- A report for the auditorSigned, and supported through the audit questions.
Four steps, one adviser.
- TermsRead the instrument and agree the accounting question.
- ModelSelect and build the model each feature requires.
- InputsVolatility, credit spread and other inputs, sourced and documented.
- ReportA signed report and support through the audit.
A named signature behind every number.
I sit on the working group of the Institute of Valuers and Appraisers, Singapore that writes the country’s valuation standards. I build instrument valuations to be read by an auditor, line by line.
Siong Yoong
About VALLARIS™ →
Standing you can check. Each line names the body behind it.
Chartered Valuer and Appraiser
CVA, Institute of Valuers and Appraisers, Singapore (IVAS).
The group that writes the standards
Member since 2018 of the IVAS Standards & Technical Working Group, which writes Singapore’s business valuation standards.
International Valuation Standards Council
Member, Memberships & Standards Recognition Committee, IVSC, the body that publishes the IVS.
How ready are you for financial instrument valuation? See your score now.
Six questions. Your score and focus areas appear as you answer. No email needed.
Answer the six questions to see your result.
0 of 6 answered.
Thirty minutes, confidential, and no fee for the first conversation.
What clients ask about financial instrument valuation.
What is a Level 3 fair value?
A Level 3 fair value relies on significant inputs that cannot be observed in a market, such as a private company’s expected volatility or cash flows. IFRS 13 requires more disclosure for Level 3 measurements, including sensitivity to the key inputs.
How is a convertible note valued?
A convertible note is valued by separating the debt and the conversion option, or by valuing the whole instrument with a lattice or Monte Carlo model that captures the conversion, redemption and any discount or cap terms.
What is an embedded derivative?
An embedded derivative is a feature within a contract, such as a conversion right or an index-linked payment, that changes the contract’s cash flows like a derivative. Under IFRS 9 some must be separated and measured at fair value.
How often do instruments need to be valued?
Instruments measured at fair value through profit or loss must be valued at each reporting date, so usually at every half-year and year-end.
Do SFRS(I) and IFRS differ for financial instruments?
No. SFRS(I) 9 and SFRS(I) 13 are identical to IFRS 9 and IFRS 13, so a valuation prepared under one meets the other.
Often needed together.
Share-based payment valuation
Share-based payment valuation measures the fair value of equity awards given to employees and others, such as share options, restricted shares and performance shares, at the grant date.
Portfolio company valuation
Portfolio company valuation sets the fair value of a fund’s unlisted investments at each reporting date, as required by IFRS 13 and set out in the IPEV Valuation Guidelines.
Purchase price allocation
Purchase price allocation (PPA) splits the price paid for an acquired business across its identifiable assets and liabilities at fair value, including intangible assets such as customer relationships, brands and technology.