Federal Agency for Education

Department of Banking

Discipline: Evaluation of financial institutions

COURSE WORK

on the topic: Valuation of GOODWILL (on the materials of URSA Bank OJSC)

Completed by: Popova Irina

Alexandrovna

group ME-73

Checked by: Melnikov

Vladimir Sergeevich

Novosibirsk 2009

INTRODUCTION

1.1. Different approaches to the interpretation of the concept of "goodwill"

1.2. Classification of goodwill as an economic category

1.3. Methodological foundations company goodwill estimates

2.1. Organizational and economic characteristics of URSA Bank OJSC

2.1.1. General economic characteristics of the bank

2.1.2. History and structure of the share capital of OJSC URSA Bank

2.1.3. Development strategy of URSA Bank OJSC

2.2. Analysis of the financial and economic activities of the bank

2.2.2. Liquidity analysis of URSA Bank OJSC

2.2.3. Analysis of financial results

3.1. Valuation of goodwill as an estimate of the difference between the market value of a company and the value of all its assets

3.2. Economic feasibility of assessing the goodwill of URSA Bank OJSC

CONCLUSION

REFERENCES

APPENDIX

INTRODUCTION

In the context of increased competition associated with the liberalization of domestic markets, the processes of globalization of the world economy, against the backdrop of constant growth in the stock markets, the deviation of the market capitalization of enterprises from the value of their real assets: buildings, structures, equipment, inventories - enterprises need an effective financial management system that takes into account the role of intangible assets and goodwill in the formation of their value.

Any company has not only material values, such as buildings, equipment, stocks of raw materials and materials, cash, etc., but also a business reputation, an established circle of customers and trusted suppliers, trademarks and brands, market fame and others. factors that, at first glance, are very difficult to assess.

Despite the complexity of goodwill valuation, there are a number of cases when valuation is simply necessary:

buying (selling) a business;

mergers and acquisitions;

· Adoption management decisions(when managing the value of the company).

In general, goodwill can be anything that helps the company earn more profit per unit of assets than the average similar company. For example, it can be a competent leader, well-trained friendly staff, proven business technologies, or a favorable territorial position.

The purpose of the assessment is to determine the market value of goodwill in order to reflect it in IFRS, which will allow us to evaluate the effectiveness of the merger of banks, as well as to assess the impact of goodwill on the formation of equity capital through an additional issue of shares.

The implementation of this goal required the solution of the following main tasks:

To reveal the content of goodwill as an economic category based on an analysis of the nature of its occurrence and forms of manifestation in the reproduction process;

Compile a multi-aspect classification of goodwill as a theoretical basis for improving the enterprise value management system;

Specify the methods for estimating the value of goodwill in order to reflect the peculiarities of the formation of the value of intangible resources;

Determine the impact of goodwill on the change in the amount of equity capital during the period of additional share issues;

The object of research is the process of forming the value of the company's goodwill.

The object of observation is URSA Bank OJSC.

Object of appraisal – goodwill of OJSC URSA Bank.

The subject of the study is the process of substantiating the market value of the goodwill of URSA Bank OJSC.

The general economic methods of research include analytical and settlement-constructive.

The degree of study of the topic - for the theoretical and methodological development of goodwill valuation issues, the works of N. Abdulaev, I. Averchev, I. Blank, E. Grishina, V. Eliseev, S. Kuznetsov, Yu. Leontiev, A. Orlov, M. Pyatov, L. Revutsky, Y. Sokolov, V. Shakin, I. Sher, E. Schmalenbach and others.

The first chapter discusses various approaches to the interpretation of the concept of "goodwill", the classification of goodwill as an economic category, as well as the methodological basis for assessing the company's goodwill. The second chapter provides organizational and economic characteristics of URSA Bank OJSC, an analysis of its financial and economic activities and conclusions regarding the assessment of the value of goodwill. The third section calculates the value of the goodwill of URSA Bank OJSC and substantiates the economic feasibility of the assessment.

CHAPTER 1

1.1 Different approaches to the interpretation of the concept of "goodwill"

In domestic financial science and accounting theory, the category "business reputation of an organization" is recognized as synonymous with the category "goodwill". ON THE. Abdulaeva and N.A. Kolaiko, Ya.V. Sokolov and M.L. Pyatov, S.V. Valdaytsev, I.A. The form is considered incorrect by the Russian translation of the English term "goodwill" and they propose to recognize the business reputation of the organization as a separate element of the goodwill of the enterprise (company). Thus, it is necessary to clearly distinguish between the business reputation of an organization, which is accepted as an element of the value of an operating company for the purposes of business valuation, financial management and accounting, from the term "business reputation", which is a category of psychology and reflects the image of the subject's perception formed by its counterparties, which is a psychological act that has no value expression.

The capital market recognizes the real existence of the goodwill of companies. So, S. Polozkov, T. Semenov indicate that “... in the early 1980s. various criteria began to show an increasing gap between the market capitalization of some firms and the value of real assets - buildings, structures, equipment, stocks ... ”, while this growth, for objective reasons, cannot be associated only with the speculative warming up of the securities market. Microsoft Corp., Intel Corp., Vodafone Group Plc, Johnson & Johnson Inc., CiANCo Systems Inc., Procter & Gamble Co., Coca-Cola Co., GlaxoSmithKline Plc are among the largest companies in the world in terms of market capitalization. which are characterized by a significant excess of the market capitalization indicator over the value of their net assets and the high value of the identifiable intangible assets they use. For this reason, the value of the business, which reflects market conditions, the legal form of the business and investors' expectations of the future performance of the business, must be increased by the value of the goodwill generated.

The English-Russian Dictionary of Economics gives the following definitions of the term "goodwill":

1. The notional value of business ties (of the company), the "price" of the accumulated intangible assets of the company, the monetary value of intangible capital (prestige of brands, experience of business ties, stable clientele);

2. Monetary value of estimated future excess profitability (given by firms compared to the average profitability of similar firms);

3. Intangible fixed capital (the difference between the price of the enterprise as a whole and the price of its real fixed capital);

4. Goodwill, goodwill (clients).

As noted by Ya.V. Sokolov, M.L. Pyatov, the category "goodwill" first began to be used in English commercial practice in the first half of the fifteenth century. In a literal interpretation, it meant the "good will" of the participants in commercial transactions in providing a number of concessions to their counterparties in exchange for concessions on their part.

In accordance with the BSV-I1 standard adopted in 1988 and supplemented in 1991 by the American Society of Appraisers (ASA), goodwill is defined as the "good name" of the company and includes intangible assets of the company, which are made up of the prestige of the enterprise, its business reputation , customer relationships, locations, product lines, etc. These factors are not separately singled out and are not taken into account in the company's financial statements, but serve as a real source of profit.

The category "goodwill" became widespread in the Anglo-American financial and accounting literature at the end of the nineteenth century. Particular attention began to be paid to goodwill, when in practice it was noted that increased demand for the company's products is created by a group of factors, the value of which is not subject to accounting and which are not directly controlled by it, for example, the reputation and professional qualities of leading managers, business connections, which generates additional profits. Since a company's asset has traditionally been understood as means that bring it profit, it could be assumed that if a company receives profit at the end of the reporting period, the rate of which on invested capital is higher than that of enterprises in a similar industry, that is, potential competitors, then the company uses its own an asset whose value is not currently valued and not reflected in financial accounting.

Taking into account the trends that have intensified at the present stage in considering an asset as a resource used in the financial and economic activities of the company and necessarily controlled by it, the traditional definition of goodwill as an asset seems unreasonable, since the company's control over its advantages arising from the individual nature of the specific the nature of labor management, is conditional and cannot be fully implemented at this stage of development of human civilization. Thus, goodwill is not an asset of the company, and, therefore, from a legal point of view, the company does not have the right to own the created goodwill, and the company cannot exercise the right of ownership through the attributes inherent in this institution, including disposing and alienating goodwill in the benefit of third parties at their own discretion, which emphasizes economic essence category "goodwill".

F. Pixley noted the presence of goodwill in every enterprise that is capable of making excess profits. By excess profit, he meant a value exceeding normal profit, calculated from the average rate of return on invested capital within a particular industry, taking into account the risks inherent in business. It should be noted that F. Pixley considered goodwill not only in the context of additional advantages of the company and extraordinary profits, but also as an asset arising from a merger and acquisition transaction. Thus, the goodwill created by an enterprise characterizes its potential for obtaining excess profits, however, for “... purely technical reasons, only acquired goodwill can be reflected in accounting, that is, goodwill arising from the purchase and sale of the enterprise itself or its shares, goodwill for which money has been paid or should be paid…” .

In domestic financial management, the dual nature of goodwill is indicated, but not considered as one of the main characteristics of this phenomenon, as a result of which the perception of the impact of goodwill on the financial system of an enterprise and the change in its value are distorted.

So, V.V. Kovalev defines goodwill as “... a conditional valuation of the “value” of an enterprise, which is the difference between the valuation of an enterprise as a whole and the total market value of all its assets, considered in isolation; goodwill depends on time and market parameters, it is revealed only in the process of a transaction for the purchase and sale of an enterprise ... ".

N.A. Abdulaeva, N.A. Kolaiko is proposed to accept "... a part of the intangible assets of the enterprise, determined by business relations, the popularity of the company name, trademark and other elements ...". A similar position is held by A.G. Gryaznova, M.A. Fedotova, S.A. Lenskaya, in accordance with the opinion of which, “... goodwill is a part of the intangible assets of an enterprise, determined by good reputation, business relations, fame of a company name, brand name. Goodwill arises when an enterprise earns consistently high profits that exceed the average level in the industry ... ".

In practice, the transaction for the sale and acquisition of the target company is preceded by an assessment of the company in order to determine the most probable price of the transaction, since each of the parties has its own ideas about the possible future profits of the target company in the conditions of the functioning of the holding or as an independent subject of economic relations, as well as about the costs incurred during the formation of the company, organizational and transaction costs. Thus, the relevance of studies of the impact of goodwill on the value of an operating enterprise is determined by the degree of intensity of occurrence of situations in which it is necessary to assess the total manifestation of individual and intangible advantages characteristic of the company. In some cases, business valuation is carried out for other reasons than the implementation of a business combination in practice, for example, in order to obtain a loan. Taking into account the strengthening tendencies of business combinations, typical for the global and Russian economies, as well as the restrictions on the use of the merger of interests method for business combinations, business valuation studies, as well as the study of goodwill as a relatively new financial category, are relevant and necessary.

Thus, considering the category of "goodwill", on the one hand, we are faced with acquired (accounting) goodwill, which is essentially an asset and arises only during the sale and purchase of enterprises, and, on the other hand, with the created (acquired) goodwill characterizing the opportunities development of a going concern and its future extraordinary earnings. Despite significant differences between them, they act as components of the same phenomenon - the presence of individual intangible advantages in a certain company, while accounting goodwill is a consequence of the created goodwill and reflects the expectations of the participants in the transaction to acquire this company about the value of its created goodwill, taking into account changes in external and internal factors over time. Based on this, the goodwill of an enterprise should be defined as a set of inseparable intangible advantages of a given enterprise that can bring it extraordinary profits and act as resources used in financial and economic activities, but control over the use of which is conditional. In the event of an acquisition of an enterprise, the deviation of the transaction price from the net asset value arising from the reimbursement of the value of the created goodwill to the previous owners is recognized as acquired goodwill and is reflected in the financial statements of the enterprise as an intangible asset.

Thus, the value of goodwill acts as a reasonable and significant element of the value of the business, which must be taken into account when determining the reasonable value of the business during the implementation of a transaction for its purchase and sale, calculating the fundamental value of the securities (shares) of the target company and forecasting the dynamics of changes in their market value in the long term.

1.2 Classification of goodwill as an economic category

It is reasonable to classify goodwill according to the following criteria:

By types of relationships, the object of which is goodwill:

Legal goodwill is always an advantage that arises only as a result of doing business, which means that it is impossible to acquire goodwill on the market just as it is impossible to alienate it in favor of a third party, and this advantage in practice has a specific value expression, which is extraordinary profit.

Economic goodwill acts as an object of economic relations. The set of those elements of a business or personal qualities that encourage customers to continue to use the services of this enterprise or this person and which bring a profit to the firm in excess of that required for a reasonable return on all other assets of the enterprise, including income for all other intangible assets that can be identified and separately valued

If possible, the disposal of goodwill:

· Non-separable goodwill is the company's goodwill that remains unchanged after a change in the previous management team.

Goodwill that is inseparable from an individual is such goodwill that is acquired by a company only at the expense of individual professional and personal characteristics administrative management and is lost along with its change.

By the degree of impact on the financial result of the enterprise:

· Positive goodwill generating extraordinary returns derived from its use.

· Negative goodwill (badwill), the impact of which on the financial result is negative, as a result of which the value of the enterprise as a single property complex is less than the corresponding value of the enterprise's property, reduced by the amount of its liabilities.

According to the forms of manifestation in the reproductive process:

Generated goodwill is goodwill generated by the entity being valued that is not recognized in the financial statements and results in extraordinary gains,

· Accounting goodwill acquired by the holding company at the time of the acquisition of the enterprise along with its other assets.

By completeness of reflection in the financial statements:

market, when the cost of acquiring goodwill is determined as the difference between the purchase price of the target company and the market value of its adjusted net assets,

· normative goodwill, when the cost of acquiring goodwill should be determined as the difference between the transaction price of the acquisition of the target company and the book value of its adjusted net assets or the initial cost when selling the target company at a specialized auction.

According to the degree of control over acquired during the business combination:

· Partial goodwill - occurs when, as a result of a business combination by way of purchase, the buyer acquires less than 100% of net adjusted assets, as a result of which the consolidated financial statements of the acquirer (holding) do not reflect the full value of the goodwill of the acquired company. This situation is typical for the acquisition of the target company by the holding company through securities.

· Full goodwill arises when full control over all assets and liabilities of the target company is established.

According to the level of manifestation in the economic system:

Enterprise goodwill is formed by intangible individual advantages created by the enterprise itself and affects the receipt of extraordinary profits by the enterprise within the relevant industry national economy.

Regional goodwill is formed by external conditions of an intangible nature, characteristic of a given region and affects the receipt by an enterprise of extraordinary profits within the national economy, due to the emergence of inalienable intangible advantages among enterprises in the region, compared with enterprises in other regions of similar industries.

· National goodwill ensures the formation of extraordinary profits for enterprises of the national economy, in comparison with enterprises of similar industries of foreign states. Protecting the interests of national producers, regardless of their location, is the implementation of national goodwill
.

Summarizing the above classification, it can be represented in a visual diagram (Fig. 1):

Figure 1 Classification of goodwill as an economic category

1.3 Methodological basis for assessing the company's goodwill

There are several ways to assess the value of a company's goodwill, which are most widely used in Russian practice.

1. Valuation of goodwill as an estimate of the difference between the company's value and the market value of all its assets. The assessment of goodwill as the difference between the market value of a ready-made business and the value of the company's assets can be conditionally divided into two large blocks. First, you need to calculate the value of all assets of the company. Secondly, you need to determine the value of the entire business as a whole, using either a comparative or income method of valuation. The choice of one or another approach depends on the availability and reliability of the information used in the assessment. Since a business is primarily perceived as a tool for generating income, it would be advisable to determine the value of a business using the income method. Income approach - a set of methods for assessing the value of the object of assessment, based on the determination of expected income from the object of assessment.

The income approach involves the use of methods for calculating the value of the object of assessment: capitalization according to the rate of return and direct capitalization. This approach is based on the assumption that the value of an object is determined by the present value of future income at an appropriate capitalization rate that takes into account the rate of return on invested capital. To determine the desired value, it is necessary to determine the amount and structure of income, the timing and risk of its receipt. After the assessment of the total assets of the company and the market value of the company, goodwill is determined as the difference between the two results of the assessment.

2. Valuation of goodwill in terms of excess earnings. The main provision of the method of excess profits is the assumption of the possibility of goodwill to bring the company profits, the level of which is higher than the industry average value on invested capital. It is possible to talk about the appearance of goodwill only if the financial result of the enterprise exceeds the financial result that it should receive in normal economic conditions functioning due to its tangible and intangible elements reflected in the financial statements and the true value of which can be measured
.

The goodwill valuation methodology, which involves the calculation of excess profit, is based on the assumption that if one enterprise receives more profit per unit of assets than a similar enterprise in the same industry, then this means that it is its goodwill or business reputation that brings additional profit to the enterprise. It is assumed that the assets of all companies bring the same profit. Thus, having determined the standard profit per unit of assets, it is necessary to compare it with the real indicator of the profitability of assets and determine the volume of unrecorded assets, that is, goodwill. When selecting enterprises analogues with which profitability can be compared, one should be guided by the following criteria:

The enterprise produces similar products (works, services);

Located in the same locality (region, district);

Has similar production facilities.

In this work, it is advisable to abandon this method, since it is impossible to find analogue banks on the Russian market. This is due to the merger of the largest banks in Russia and the formation of a new unique legal entity.

3. Valuation of goodwill by sales volume.

To use the method of assessing goodwill by sales volume, you need to know the average industry profitability ratios. The company's goodwill is calculated using the formula:

GW = (NOI – QfxRq)/Rg, (1)

where G W is goodwill;

NOI - net operating income from the company's activities;

Rq is the industry average sales profitability ratio;

Rg - coefficient of capitalization of intangible assets;

Qf is the cost of goods sold.

Traditionally, the excess earnings method has been used for a long period of time to value small businesses. To date, the method is widely used in valuation practice.

Since this method requires the calculation of the cost of goods sold, which cannot be done in relation to banks due to the wide diversification of activities, this causes the rejection of this method for assessing the goodwill of URSA Bank OJSC.

4. Goodwill valuation method based on the cost indicator.

Taking into account the peculiarities of the group of methods of capitalized profit (the method of excess profits, the method based on the sale of products), the author proposes a method for estimating goodwill based on the cost indicator.

The economic content of this method is to determine the net profit indicator in conjunction with the cost indicator based on the assumption of the manifestation of a combination of individual intangible advantages at the stage of distribution of the produced product (goods, work, services), which corresponds to the essence of goodwill. The normal profit used to calculate the excess profit is defined as the product of the cost of manufactured products (goods, works, services) and the profitability indicator production activities equal to the profit/cost multiplier. Taking into account all the variety of activities of the enterprise, in the implementation of which its assets and goodwill are used, in this case, as an indicator of the cost of production, the totality of all economically viable expenses of the enterprise reflected in the financial statements is understood.

To smooth out the influence of random dynamic factors on the valuation of goodwill, it is necessary to use the average values ​​of the considered indicators for at least three years preceding the moment of valuation.

Since the method is based on the cost indicator, and in banking the services provided are widely diversified, which does not allow determining the average annual cost for the whole bank. This justifies the refusal to use this method in the course work.

5. Qualimetric method for assessing goodwill.

The economic content of the qualimetric method for assessing goodwill is to draw an analogy between the usefulness of an enterprise and the value of its goodwill created.

Whereas the utility (or quality) coefficient is calculated by the formula:

where Kf is the utility (or quality) coefficient of the evaluated
object;

qmax - the best indicator among the analogues of the evaluated object;

qmin - the worst indicator among the analogues of the assessed object;

qf is the actual value of the utility (quality) indicator of the assessed object.

According to V.M. Eliseev, the value of an enterprise is directly identified with the level of utility of its activities.

Due to the fact that in the general economic sense, depreciation is interpreted as a loss of utility of an object, the value of the level of depreciation of all assets of the assessed enterprise (W) in the aggregate (total depreciation of the enterprise) will be equal to:

The cost of goodwill (GW), in accordance with the point of view of V.M. Eliseev, is defined as the difference between the value obtained and the physical depreciation of non-current assets (Wf) and the value of intangible assets reflected in the financial statements.

GW = W - Wf - IA (4)

The considered method seems to be insufficiently substantiated and cumbersome, while in essence this method must be attributed to the group of indirect methods, the relevance and necessity of which in practice is questioned.

Taking into account the above aspects, it is reasonable to refuse to use this method in assessing the value of the goodwill of URSA Bank OJSC.

Thus, in order to determine the value of the goodwill of URSA Bank OJSC, it is reasonable and expedient to apply the method of estimating the difference between the value of the company and the market value of all its assets.

CHAPTER 2. ANALYSIS AND EVALUATION OF THE FINANCIAL AND ECONOMIC ACTIVITIES OF THE ENTERPRISE

2.1 Organizational and economic characteristics of URSA Bank OJSC

2.1.1 General economic characteristics of the bank

Novosibirsk URSA Bank appeared in December 2004 as a result of the merger of Sibacadembank and Uralvneshtorgbank. URSA Bank is one of the leading regional banks in the country, which occupies a leading position in its "home" markets (Siberian and Ural Federal Districts).

The bank is controlled by a group of Russian entrepreneurs headed by
I. Kim, most of whom have been successfully working in the banking sector for a long time. Foreign shareholders (EBRD, DEG and Clariden Leu) own over 28% of the bank's capital. Relationships between Russian and foreign owners of shares and the bank are governed by the shareholders' agreement.

The Bank is developing as a financial institution providing a full range of services. The focus is on consumer lending, as well as lending to small and medium enterprises.

The level of capitalization of the bank can be called acceptable, given that a significant part of the capital is represented by hybrid instruments (preferred shares), and a significant share of the share capital is goodwill.

If the quality of the loan portfolio in the corporate segment is quite good, then the percentage of overdue loans in the retail portfolio is quite high, although not critical. However, portfolio risks are expected to decrease due to an increase in the share of less risky loans.

Loan portfolio diversification is above average. At the end of last year, the twenty largest borrowers accounted for 10.6% of the total loan portfolio. Such a low level of risk concentration (noticeably below average) is ensured by the emphasis on lending to individuals, small and medium-sized enterprises.

URSA Bank shows fairly high profitability due to wide margins and improved efficiency. In recent years, the expansion of the bank's activities was mainly due to the growth of assets. Customer deposits could not be the only source of funds for growth, and therefore the bank resorted to various sources of financing in the capital markets (and, accordingly, increased its dependence on them), which can sometimes be expensive and sensitive to unfavorable conditions.

URSA Bank is one of the largest regional banks in the country. According to the Interfax agency, as of April 1, URSA Bank closed the top twenty leading banks in terms of assets.

URSA Bank became the successor of the Novosibirsk Sibacadembank, to which the Ekaterinburg Uralvneshtorgbank was merged in December 2004. Thanks to similar corporate cultures, the merger went relatively smoothly, but at the operational level, the banks' business is not yet fully integrated. URSA Bank ranks second after Sberbank in the Siberian Federal District and is one of the leading banks in the Urals Federal District. The Siberian and Ural federal districts include 22 subjects of the federation and together occupy approximately 40.5% of the country's territory. At the end of March this year, 33.4 million people lived in the two districts. URSA Bank's network includes 21 regional branches, 239 branches, 4 representative offices and 360 ATMs.

At the end of March, the bank had about 10,000 employees. The bank's development strategy provides for the optimization and improvement of the efficiency of the existing network.

Experienced foreign shareholders (EBRD, DEG and Clariden Leu), whose representatives play a prominent role in the Board of Directors, are directly involved in the formation of the bank's development strategy. The bank is led by a highly professional management team, but the presence of interested shareholders with excellent understanding of banking provides additional support.

Mainly due to the rapid growth of assets, the bank has grown rapidly over the past three years, as a result of which its market share has risen sharply from a fairly low level. The Bank actively developed the direction of unsecured consumer lending in most regions of its presence. Consumer loans generate very high returns, but are associated with increased risks, resulting in a relatively high default rate.

The rapid growth of the bank requires periodic injection of capital. To prevent the dilution of shareholders' shares, the bank is actively issuing capital raising instruments without voting rights (for example, preferred shares). Such hybrid instruments combine features of equity and debt. It should be noted that excessive interest in issuing hybrid instruments may negatively affect the perception of the bank's capital quality by both investors and rating agencies. As a mitigating circumstance used in the planned issue of preferred shares, will be the low level of the minimum dividend rate (approximately 3.86% per annum against 9% for the previous issue).

2.1.2 History and share capital structure of OJSC URSA Bank

Sibacadembank (renamed URSA Bank in December 2004) was established and registered by the Bank of Russia in 1990. In 1998, Sibacadembank merged with the Russian People's Bank, and in 2001 with the Kuzbass Transport Bank. In 2001, Sibacadembank acquired a controlling stake in Blagoveshchensk Dalvneshtorgbank (now Vostochny Express Bank), which was sold in 2004. In 2003, the bank purchased 100 new ATMs from the German company Wincor Nixdorf International GmbH and in the same year became the owner of a 57.8% stake in the capital of the insurance company ZHASO, paying 33.8 million rubles for the package. Participation in an insurance company is considered by URSA Bank as a financial investment; in addition, a non-exclusive business relationship has been established between the bank and the insurer. In its current form, URSA Bank appeared on December 22, 2004, when Sibacadembank bought out all the shares of Uralvneshtorgbank, after which the financial institution received a new name - URSA Bank.

Over the past four years, URSA Bank has been actively working not only with international commercial banks, but also with a number of major international financial institutions. In 2003, Sibacadembank entered into a five-year USD7 million loan agreement with the International Finance Corporation (IFC), and in January 2005 Sibacadembank received a seven-year loan from Kreditantstalt fur Wiederaufbau (KfW) in the amount of USD6.1 million for on-lending small and medium businesses. In 2005, IFC provided Sibacadembank with a subordinated five-year USD 6 million loan to increase the capitalization of the Russian bank. In December 2005, DEG and Clariden became shareholders of Sibacadembank.

At a joint meeting on May 17, 2004, the supervisory board of Uralvneshtorgbank and the board of directors of Sibacadembank discussed the possibility of merging the two credit institutions. As a result, the concept of the merger and a number of its parameters were approved, including the valuation of ordinary and preferred shares of Uralvneshtorgbank and Sibacadembank in relation to the merger. In September, extraordinary general meetings shareholders of Sibacadembank and Uralvneshtorgbank, on which the shareholders of the banks made a decision on reorganization through merger and approved other necessary documents.

Finally, on December 22, Sibacadembank completed the purchase of shares in Uralvneshtorgbank, after which the latter's ordinary and preferred shares were converted into Sibacadembank's ordinary and preference shares, respectively. URSA Bank determined the purchase price of Uralvneshtorgbank based on the valuation of the latter's shares, which were exchanged for ordinary and preferred shares of the additional issue of URSA Bank itself. As of the purchase date, the total value of Uralvneshtorgbank's shares, according to URSA Bank, was RUB 8.6 billion. with a fair value of net assets of 2 billion rubles. and the value of intangible assets of 6 billion rubles.

Both Sibacadembank and Uralvneshtorgbank had a developed branch network in various regions of the country. Sibacadembank was most fully represented in the Siberian Federal District, while Uralvneshtorgbank was represented in the Urals Federal District. It should be noted that the branch networks of banks were geographically adjacent, but did not intersect. This regional diversification is expected to enable the combined institution to increase its market share in both the corporate and retail segments, benefit from synergies in promoting its products, and provide better protection against a downturn in the economic situation in a particular region. In the key markets (Siberian and Ural Federal Districts), URSA Bank ranks second in terms of total assets, second only to Sberbank, and in the “home” market of the Novosibirsk Region, URSA Bank even managed to get ahead of the largest bank in the country.

Legally, the procedure for the merger of Sibacadembank and Uralvneshtorgbank was completed on December 22, 2004, but a number of remaining issues related to the merger remain to be resolved. It is required, in particular, to unify product lines and conditions, form uniform standards for opening accounts and issuing loans, develop a single personnel policy, switch to the same IT platforms, create a single processing center and data storage system for the URSA Bank network in the Ural and Siberian Federal Districts, and complete the rebranding.

URSA Bank is controlled by a group of entrepreneurs (most of them have been business partners for a long time) and foreign institutional investors (EBRD, DEG and Clariden Leu). The latter collectively own more than 28% of the bank's capital. The Board of Directors currently has 11 members, including three representatives of foreign shareholders and two independent directors. Three committees have been established for strategic development, audit and compensation. The presence of Russian and foreign capital in the share capital structure of URSA Bank is a favorable circumstance for holders of the bank's liabilities. Although the majority stake belongs to Russian shareholders, they do not have a qualified majority on the board of directors, which means they must listen to the opinion of strategic partners and independent directors.

2.1.3 Development strategy of URSA Bank OJSC

URSA Bank plans to further develop as a universal bank offering a full range of services for corporate and private clients in the key markets of the Urals, Siberian and Far Eastern Federal Districts. URSA Bank expects to increase its market share in both the corporate and retail segments and maintain its second position (after Sberbank) in its main markets of activity. In addition, in the medium term, the goal is to become one of the ten largest banks nationwide. Even in the face of tougher competition, the bank's tasks seem feasible.

Let's single out the main elements of the strategy:

1. Cross selling retail products existing clients.

The base of individual clients (both current and those who used the services of URSA Bank in the past) totals 2.8 million people. Such a large client base is one of the key competitive advantages of URSA Bank. If in previous years URSA Bank in the retail segment almost completely focused on attracting new customers, then in the future significant attention will be paid to selling new products to existing customers of the bank. Since URSA Bank has already gained a better understanding of the needs of its customers and studied their credit histories, cross-selling is expected to be targeted and improve the quality of the loan portfolio. In addition, URSA Bank expects to develop retail services through cross-selling of banking products to employees of its corporate clients. In our opinion, if the bank manages to successfully develop cross-selling, it will be able to achieve a diversification effect and increase revenues per client. To a certain extent, this can compensate for the negative consequences of declining lending yields.

2. Changing the structure of the portfolio of loans to individuals in the direction of increasing the share of less risky products.

Until last year, the rapid growth of the portfolio of loans to individuals was provided mainly due to the active development of consumer lending and, to a lesser extent, car loans. But already last year, URSA Bank shifted its focus to less risky retail loans - mortgages, credit cards. The implementation of the new strategy resulted in a noticeable change in the structure of URSA Bank's loan portfolio. Thus, the share of consumer loans in the total portfolio of loans to individuals decreased from 85% at the end of 2005 to 75% a year later, while the share of mortgage loans over the same period, on the contrary, increased from 1.1% to 17.1%. Developing mortgage lending, URSA Bank strives to make the most of its extensive branch network in the Siberian Federal District, as it is often the only credit institution offering mortgages in a given area. Such a shift in the portfolio structure may become the main factor in reducing credit risks, which, of course, can only be welcomed. On the other hand, the range of potential borrowers whose savings are sufficient to pay down payment on mortgages is largely limited, which means that URSA Bank may reduce the requirements for the amount of contribution from the borrower's own funds (usually 10-20%), which will lead to a decrease in the quality of new loans.

3. Expansion of the range of services for corporate clients

In order to attract new corporate clients and increase income from existing borrowers, URSA Bank continues to develop new loan products. In response to customer requests, the bank launched several new products last year, including project finance, leasing and mezzanine finance. URSA Bank hopes to obtain higher profitability from such operations than from more traditional banking products. It is expected that the launch of new products will contribute to the growth of the loan portfolio in the corporate segment and increase profitability without compromising credit quality. In our opinion, this direction promises good prospects, but we hope that the scale of more risky operations will be limited, and the risks will be controlled.

4. Lending to small and medium enterprises.

URSA Bank actively lends to small and medium business since 2003 and plans to increase the volume of operations in this segment. SME lending is one of URSA Bank's fastest growing areas of business in the corporate segment, and management believes that its presence in local markets and significant operating experience provide the bank with a clear competitive advantage in key markets. As of March 31 this year, URSA Bank's client base consisted of 12 thousand borrowers from among small and medium-sized enterprises, and the loan portfolio reached 5.556 billion rubles. (6.8% of the volume of the total portfolio). Lending to small and medium-sized businesses is an important direction in terms of further diversifying the loan portfolio and increasing profitability without a disproportionate increase in risks.

5. Balanced development of the bank's network with an emphasis on efficiency.

URSA Bank's network plays a key role in expanding the customer base in the retail business and lending to small and medium enterprises. During last year's rapid growth, URSA Bank opened 54 branches and departments. In 2007, URSA Bank expects a slowdown in the growth rate of the branch network compared to previous years. In addition, in order to increase the efficiency of URSA's work, the Bank aims to transfer some of the functions currently concentrated in the bank to third parties.

All of the above measures aimed at improving efficiency are simply necessary in the face of tougher competition and growing pressure on interest margins.

2.2 Analysis of the financial and economic activities of the bank

2.2.1. Analysis of the structure and dynamics of changes in the key performance indicators of the bank

We will evaluate the results of financial and economic activities on the basis of the following documents:

1. Aggregate balance sheet in 2005 and 2006

2. Aggregate income statement for 2005 and 2006

Table 1

Dynamics and structure of changes in balance sheet items
in 2005-2006 (OJSC URSA Bank) thousand rubles

Based on the analysis carried out, the following conclusions can be drawn:

Due to the rapid growth of assets over the past few years, URSA Bank's capital adequacy ratios have come under pressure. However, their values ​​met the requirements of the regulator and creditors, since the funds were raised mainly through the issuance of preferred shares (which combine the features of debt and equity financing), as well as the attraction of subordinated debt (i.e., second-tier capital). The absorption of Uralvneshtorgbank was carried out only through the issue and exchange of shares.

During the analyzed period, the total value of assets increased by 61688438 thousand rubles. and its growth rate was 242%. This indicates the consolidation of capital due to the merger of banks.

The vast majority of assets is "Net Loan Debt", which increased by 47960062 thousand rubles. This indicates an expansion of the range of credit operations provided.

In the reporting year, we also observe an increase in the amount under the item “Cash” by 746,615 thousand rubles, or by 134%, and, at the same time, its share in the balance sheet increased by 2.2%. This increase in the share of non-performing assets is a negative trend. Such an impact can have a negative impact on income levels.

The amount under the item "Net investments in trading securities" increased by 290,047 thousand rubles, and its growth rate was 116.54%. Despite this, its share in the balance sheet decreased by 2%, which indicates a decrease in the bank's attraction of non-traditional methods of making a profit.

The main correspondent account with the Central Bank in the reporting year amounted to 3,017,755 thousand rubles, which is 24,336 thousand rubles. less than in the previous one, which indicates the strengthening of the bank's position. Such a change also indicates a merger of banks, which indicates the consolidation of equity capital.

The amount under the item "Funds of credit organizations" in the reporting year increased by 8,737,490 thousand rubles. and its growth rate was 183%. The share in the balance sheet totaled 24%, which is 6% more than in the base year. This is due to the increase in deposits of other credit institutions, which indicates that the bank has established itself as a reliable partner.

The adopted development strategy is confirmed by the increase in the amount under the item “Fixed assets, intangible assets and inventories”. The amount in the reporting year amounted to 2810009 thousand rubles. against 1693048 thousand rubles. base, the growth rate was 165 percent.

A significant increase is observed in the item "Net investments in securities available-for-sale". The amount in the reporting year increased by 9,604,144 thousand rubles compared to the base year. and the growth rate was 520%. Such an increase indicates an increase in the share of highly liquid assets.

The amount under the item "Requirements for receiving interest" in the reporting year amounted to 104,554 thousand rubles, which is 62,695 thousand rubles. more than the previous one, which indicates a deterioration in the quality of the loan portfolio.

At the expense of own funds, URSA Bank OJSC formed 9.7% of all liabilities, attracted resources in the structure of liabilities account for 90.3%, which in general does not correspond to the current structure in world banking practice, since the normal value of attracted resources should be at level of 80–85%. This indicates a high dependence of the bank on borrowed funds.

The prevailing share in the bank's liabilities is accounted for by the funds of clients (non-credit organizations) - 55% or 64,097,345 thousand rubles, which is by
40230995 thousand rubles more than the base year. Of these, 36% are deposits of individuals. The reason is the successful policy of the bank to attract private clients.

In the reporting year, there is an increase in the item "Issued debt obligations" by 7,003,435 thousand rubles. and the rate of change was 273%. This fact testifies to the increase in the volume of issuance of bonded loan securities.

An increase in the amount under the item “Provisions for possible losses on contingent liabilities of a credit nature, other possible losses and transactions with residents of offshore zones” by 76,981 thousand rubles. or 287% due to the deterioration in the quality of the loan portfolio.

During the analyzed period, the bank's own funds increased by 4,660,766 thousand rubles. or 211 percent.

In particular, the growth of own funds, for the most part, occurred due to share premium by 2,412,783 thousand rubles. and due to the revaluation of fixed assets by 412,717 thousand rubles.

Profit to be distributed for the analyzed period increased by 200% and amounted to 2630169 thousand rubles. against 405626 thousand rubles. previous year.

The bank's profitability is the result of the optimal structure of its balance sheet, both in terms of assets and liabilities, and the target orientation of the bank's activities in this direction. Other important conditions for ensuring the profitability of the bank are the rationalization of the structure of expenses and income.

For evaluation purposes, it is necessary to normalize the income statement. To do this, it is necessary to delete the article “Net income from one-time operations”.

table 2

Profit and loss statement for 2005-2006

(OJSC URSA Bank) thousand rubles.

Based on the analysis carried out, we draw the following conclusions:

In 2006, compared with 2005, there is an increase in net interest income by 2,204,744 thousand rubles. Its growth rate was 238%. This is due to the growth of interest income by 4,581,369 thousand rubles. (236%) and an increase in interest expenses by 2,376,625 thousand rubles.

The growth of interest income, in turn, is due to a significant increase in interest received from the placement of funds in credit institutions by 53,309 thousand rubles, the growth rate was 170%; one can also observe a sharp fluctuation in the positive direction in loans granted to non-credit organizations for 3,862,925 thousand rubles. or 245 percent.

Compared to 2005, net fee and commission income increases and in 2006, respectively, amounts to 5,616,536 thousand rubles.

During the analyzed period, there are negative amounts under the item “Provisions for possible losses”.

During the analyzed period, there is an increase in profit before tax by 1,793,224 thousand rubles. Its growth rate was 208 percent.

Accrued taxes increased and in 2006 amounted to 811,890 thousand rubles. against 338909 thousand rubles. 2005 Net profit increased in the reporting year compared to the previous year by 1,169,306 thousand rubles. or 193%. Such growth can be justified by the positive result of activities in many articles of the report.

2.2.2 Liquidity analysis of URSA Bank

In order to control the state of the bank's liquidity, that is, its ability to ensure the timely and complete fulfillment of its monetary and other obligations arising from transactions using financial instruments, instant, current, long-term liquidity standards are established that regulate (limit) the risks of the bank losing liquidity.

The bank's instant liquidity ratio (N2) regulates (limits) the risk of a bank losing liquidity within one business day and determines the minimum ratio of the amount of the bank's highly liquid assets to the amount of the bank's liabilities on demand accounts. The minimum allowable numerical value of the H2 standard is set at 15 percent.

The bank's current liquidity ratio (N3) regulates (limits) the risk of the bank losing liquidity within 30 calendar days closest to the ratio calculation date and determines the minimum ratio of the amount of the bank's liquid assets to the amount of the bank's liabilities on demand accounts and for up to 30 calendar days. The minimum allowable numerical value of the H3 standard is set at 50 percent.

The bank's long-term liquidity ratio (N4) regulates (limits) the risk of a bank losing liquidity as a result of placing funds in long-term assets and determines the maximum allowable ratio of bank credit claims with a remaining maturity of more than 365 or 366 calendar days to the bank's own funds (capital) and liabilities (liabilities) with a remaining maturity of over 365 or 366 calendar days.

Table 3

Liquidity indicators of JSC URSA Bank as of 01.01.2007

(1) - the decoding of the formulas is presented in Appendix 1.

H2 - exceeds the normal value more than 2 times. Due to this, there is practically no risk of losing liquidity within one business day for this bank. In addition, there is a significant reserve for attracting demand deposits, if necessary.

H3 - exceeds the established minimum by 1.57 times. This ratio indicates that there is no risk for the bank to lose liquidity within the next thirty calendar days.

H4 - 8% close to the maximum allowable value, which indicates the undesirability of attracting a large mass of long-term deposits until the bank's borrowers repay long-term loans.

H5 exceeds the set value by 2.44 times, which indicates a high level of financial stability, which allows attracting additional deposits (liabilities), as well as forming funds to cover potential losses from the occurrence of insurance situations related to credit, market, operational and other types of risks .

From the analysis carried out, it can be concluded that the bank does not risk losing liquidity. Therefore, the bank achieves normal values ​​of mandatory ratios by manipulating the amounts on the reserves accounts to cover market, operational and other types of risks.

2.2.3 Analysis of financial results

To analyze the financial results of the bank's activities, the data of the balance sheet, profit and loss statement for the relevant period are used.

Table 4

Financial results of activity of "JSC URSA bank" for 2005-2006

URSA Bank remains quite profitable, despite strong pressure on interest margins, and continues to pleasantly surprise with its financial results. The latter is largely due to the bank's initial focus on high-yield credit products (in particular, unsecured consumer loans with a gradual transition to credit cards).

URSA Bank, however, is not a cost leader. With such an extensive business model, the bank allowed itself little control over operating costs (including loan losses). In the next few years, the situation should change: more attention will be paid to curbing growth and optimizing costs. While the bank has achieved notable efficiency gains in recent years, there is still room for improvement.

The total profitability at the end of the reporting period exceeds its value in the previous two times. A significant increase in profit during the period entails an increase in the overall level of profitability.

The financial margin exceeded the value of the previous period by 4% due to the share of working assets and amounted to 19.5%, therefore, the share of net operating income in the formation of profit increased, but still remained insignificant. This is a normal trend for a bank, since its profit should be formed at the expense of interest income.

Interest margin increased by only 1% and amounted to 10.8%. This indicates a trend towards increasing the efficiency of financial investments, but in the reporting period this trend has only begun to emerge. By itself, the increase is not significant.

The value of the profitability index of all assets increased by 1.4% and amounted to 3.3%. This happened due to the diversion of the share of working assets to the cash item, which, given the trend of increasing the efficiency of working assets, is extremely undesirable.

Return on equity increased by 5%. This is due to increased profits and efficient use of capital.

The development of URSA Bank over the past few years has taken place against the backdrop of rapid asset growth. Since the underlying growth rates of deposits were lower than the growth rates of issued loans, the bank's dependence on borrowings in the domestic and especially foreign markets increased significantly.

The strengthening of the bank's focus on borrowing in the financial market led to a sharp increase in the ratio between loans and deposits.

The Bank expects the gap between the growth rates of loans issued and deposits to narrow as the market matures. Meanwhile, the bank will become highly dependent on debt capital markets, which will make it vulnerable to changing market conditions and the mood of the investment community. Retail deposits account for the lion's share of funds on personal accounts of URSA Bank, which makes its client base quite highly diversified. Going forward, URSA Bank intends to make even greater efforts to raise funds from current and new corporate clients to further diversify funding sources and manage costs.

URSA Bank's assets and liabilities appear to be well balanced in terms of maturity, which once again reassures us that the bank is managing its liquidity very prudently.

Summing up the second section, we conclude regarding the assessment:

Since when evaluating goodwill by means of the difference between the value of the company and the market value of all its assets, we need to determine the market value of the business, and the results of the analysis allow us to substantiate the following aspects. There were no analogues of such mergers in the Russian market, and this justifies the rejection of the comparative approach. The use of the cost approach in this case is unreasonable, since we are evaluating an ongoing business. Since the bank is developing steadily and actively, therefore, the most objective results will be given by the income approach. But since URSA Bank, as a new legal entity, does not operate for long, it is impossible to conduct a retrospective analysis and, accordingly, forecast cash flows, which is required by the discounted cash flow method. If we take the reports of Sibacadem and Uralvneshtorgbank separately, then distorted data will be obtained, therefore, when assessing goodwill by the method of exceeding the market value of a business over the value of its assets, it would be advisable to use the profit capitalization method.

CHAPTER 3 JUSTIFICATION OF THE MARKET VALUE OF URSA BANK'S GOODWILL

3.1 Valuation of goodwill as an estimate of the difference between the market value of a company and the value of all its assets

When using this method of exceeding the market value of a business over the value of its assets, we will focus on the valuation of a business through the capitalization of profits. Profit capitalization method is one of the income approach methods.

Consider practical use profit capitalization method by stages:

analysis of the financial statements of the enterprise;

determining the amount of profit to be capitalized;

calculation of the capitalization rate;

Determining the value of the enterprise's business.

Determining the amount of profit that will be capitalized is in fact the choice of the time period for which profit is calculated:

profit of the last reporting year;

profit of the first forecast year;

The average profit for the last 3-5 years.

In order to assess the value of the goodwill of URSA Bank OJSC, we will take the profit of the last reporting year, since the calculated indicators of both the profit of the first forecast year and the average profit for the last 3-5 years will not be reliable due to the lack of retrospective information of URSA Bank OJSC as a single legal entity. Thus, we take the profit of the last reporting year from the normalized income statement, which is 2423101 thousand rubles.

The calculation of the capitalization rate is usually made on the basis of the discount rate by subtracting the expected average annual growth rate of earnings in order to exclude from the discount rate the risks associated with the possibility of non-receipt of profit. The following methods are most often used to determine the discount rate:

· capital asset valuation model;

model of cumulative construction;

· weighted average cost of capital model.

The discount rate and the capitalization rate are similar in their economic essence and are interconnected (mathematically, the capitalization formula is a modified discounting formula, with the number of forecast periods tending to infinity). Since the bank plans to continue its activities indefinitely, the relationship between the discount rate and the capitalization rate can be expressed by the formula:

R = i – g, (5)

where R is the capitalization rate;

i – discount rate;

g - expected growth (decrease) rates.

Based on the formula, we conclude that we need to calculate the discount rate. Since banking activity is characterized by a wide range of risks, the calculation of the discount rate by the cumulative construction method will be the most reliable.

The essence of the cumulative construction method is the summation of risks, often determined by expert means.

According to the original "Cumulative Discount Rate Method" published in Business Valuation Review, December 1992, the following risk factors are taken into account, ranging from 0% to 5%:

a key figure in leadership; the quality of leadership;

the size of the company;

· financial structure (sources of financing of the company);

commodity and territorial diversification;

diversification of the clientele;

income: profitability and predictability;

other special risks.

In accordance with this method, the final discount rate is calculated by formula (6):

R = Io + Σ(Kp), (6)

where I o is the risk-free rate;

Kr - risk factors listed above.

The rate of return on government securities is usually considered as the risk-free rate. In Russia, GKO-OFZ, Russian Eurobonds Russia-30 with a maturity of 30 years can be considered as such assets.

As of November 2007, the rate of return on government securities is 6.43% according to the Central Bank of the Russian Federation.

So, let's calculate the discount rate using the cumulative construction method. The calculations are presented in Table 5.

Table 5

Discount rate calculation

Explanations for calculating the discount rate:

Banking activity is recognized as a commercial activity, that is, one that is aimed at obtaining a certain profit. The main, fundamental characteristic of any entrepreneurial activity is risky.

By risk factor “Key person in management; quality of leadership” zero risk by almost all criteria. This is due to the high qualification of the top management of the bank. In terms of sufficiency internal reserve staff is at high risk due to constant staff turnover. There is also a risk of lack of experience in individual personnel units.

As for the size of the company, following the merger, the bank significantly increased its capital, which resulted in a zero percentage of risk on many aspects of this group of risks.

Considering the risks associated with the financial structure, a 2.5 percent risk is affixed for an insufficient level of autonomy coefficient (since 9% of the balance sheet accounted for own funds), and an average of 15-20 percent for the industry.

In the context of client diversification, the main risks are associated with uneven distribution of revenue among clients, that is, the loss of a major client can cause an imbalance in the bank's activities.

Profitability indicators meet the established criteria and, therefore, the risk is zero.

High competition in the industry determines the risk value of 5 percent. Since URSA Bank OJSC has such a focus in its activities as issuing high-risk loans, the number of overdue loans is higher than the industry average.

The presence of operational risk in the bank is associated with high staff turnover and a large number of trainees.

Since banking activities are largely inherent in risks associated with the external environment, the possibility of losses due to adverse changes in market prices for stock values ​​(stock risk), the possibility of losses due to unfavorable changes in foreign exchange rates (currency risk), the possibility of financial losses ( losses) due to unfavorable changes in interest rates on assets, liabilities and off-balance sheet instruments of the credit institution. All of these positions are assigned a five percent risk rating.

Thus, the real discount rate at the time of valuation is 20.53 percent.

Since the calculation of the capitalization rate requires the value of long-term income growth rates, but the lack of retrospective information does not allow us to make a reliable calculation, we turn to the calculated indicators of independent experts. Since banking activity is strictly regulated, attracting great interest from various groups of interested and independent persons, the largest merger of two Russian banks could not go unnoticed. According to data published by independent agencies Moody's, RusRating, Fitch, the average annual growth rate will be about 4.7%.

R = 20.53% - 4.7% = 15.83%.

Determining the value of the business using the capitalization method is carried out according to the formula:

where V is the cost;

I - the amount of profit;

R is the capitalization rate.

Thus, we calculate the value of the business of URSA Bank OJSC:

V \u003d 2,423,101,000 / 15.83% \u003d 15,307,018,320 rubles.

Since the value of goodwill is calculated as the difference between the value of the business and the value of all its assets, we will take the value of the assets of URSA Bank OJSC from the merger report, which is 10,590,648,790 rubles.

Now we have all the data necessary to calculate the value of the goodwill of URSA Bank OJSC:

GW = 15 307 018 320 rubles. - 10 590 648 790 rubles. = 4,716,369,530 rubles.

3.2 Economic feasibility of assessing the goodwill of URSA Bank OJSC

Since 28% of the capital of OJSC URSA Bank belongs to foreign investors, and foreign partners are also members of the board of directors and the board of the bank, the provision of financial statements in accordance with international standards is an essential condition for the effective functioning of the system.

Since goodwill is singled out in IFRS as a separate article and is subject to reporting, the process of its assessment is quite reasonable. There are still no such indicators in the international reporting of Russian banks. The mergers Uralsib and Investsberbank, which have gone the way, were less focused on foreign investors, and therefore the provision of IFRS did not seem appropriate to them. Since there are no such large associations, the primacy of goodwill reflection belongs to OJSC URSA Bank. Representatives and top managers of the banking sector agree on the need for a market assessment of the bank's goodwill, as interested people receive more reliable information, which leads to the overall transparency of the banking system.

Goodwill would be recognized as an improper asset under Russian accounting standards. In international reporting, it has a different meaning: the owners of the bank show that the united URSA Bank will be able to earn 4,716,369,530 rubles in the coming year. more than Uralvneshtorgbank and Sibacadembank would bring separately. This reflects the economic efficiency of the merger of the two banks.

As for attracting additional financial injections at the expense of the cost of goodwill, it should be said that today more than 70% of capitalization, for example, on the London Stock Exchange falls on the goodwill of the company and this trend is growing. In the Russian banking sector, during the year, most of the banks whose shares are traded on the stock exchange were valued more expensively - their value was almost five times higher than the capital. For the owner, the positive goodwill of the company is not just words, it is money, for example, the value of shares on the stock exchange. Owners invest their efforts in increasing this goodwill and constantly monitoring, thus controlling the level of change in the value of their business.

In order to assess the impact of goodwill on the change in the value of the company's equity capital during the period of additional share issues, along with exchange quotations necessary for calculating the market capitalization indicator, it is advisable to consider the sale prices of shares during the issue period, and along with the net assets of the company - the discounted prices of shares of previous issues, multiplied by the corresponding number of issued shares.

Since the shares of URSA Bank OJSC are traded on stock exchanges, the results of transactions are open. If we consider the previous issue of preferred shares, the number of which amounted to 1 million pieces. and the planned issue of the same number of shares, then through simple calculations you can see the economic effect of goodwill on the share price.

Based on the data on the purchase and sale of shares traded on the RTS, the fair value of preferred shares of URSA Bank is estimated at $2.47. Excluding goodwill, this equates to a bank valuation of 5.8 equity. Accordingly, the share of goodwill in the share price is 4.2 of capital, i.e. 42 percent.

If we take into account that during the planned issue, the share of goodwill in the share price remains at the same level, i.e. 42%, then the goodwill calculated by us allows us to find the total cost of the planned share issue:

(4,716,369,530 rubles * 100%) / 42% = 11,229,450,000 rubles.

Given the number of shares of the planned issue, we can determine the price of one share:

RUB 11,229,450,000/1,000,000 pcs. = 11,229 rubles.

For convenience, we will translate the price of one share of URSA Bank OJSC on the exchange market according to an already completed transaction into rubles:

$2.47*35 RUB = 86.4 rubles.

Thus, now we can compare the two prices per share and, all other things being equal, we see an increase in the share price in the planned share issue by 11,142.6 rubles. (11,229 rubles - 86.4 rubles = 11,142.6 rubles). Such an impact is exerted by an increase in the cost of the bank's goodwill, which is a positive trend in its development. Taking into account the results obtained above, we can conclude that by managing the company's goodwill, we control the price of issued shares and, in fact, receive real additional financial injections due to the practically "air value", i.e. goodwill.

Monitoring the effectiveness of financial decisions based on the assessment of goodwill is a system for analyzing, evaluating, diagnosing and correcting financial decisions that lead to a change in the value of the enterprise. Monitoring allows taking into account the impact of goodwill on the increase in the value of the enterprise, as well as the role of subjective assessments of investors and other counterparties in making financial decisions, with the lowest labor costs and more quickly diagnosing and correcting financial decisions.

CONCLUSION

In the face of increasing competition associated with the liberalization of domestic markets, the processes of globalization of the world economy, against the backdrop of constant growth in the stock markets, the deviation of the market capitalization of enterprises from the value of their real assets, enterprises need an effective financial management system that takes into account the role of goodwill in the formation of their value.

The need for a professional value of goodwill is increasing, which directly emphasizes the relevance of the topic under study.

The study of goodwill based on the analysis of various approaches to its interpretation made it possible to define goodwill as a set of inseparable intangible advantages of an enterprise that can bring it extraordinary profits and act as resources used in financial and economic activities. The deviation of the entity's sale price from its net asset value is due to the recovery of the value of goodwill, which to the buyer is purchased goodwill.

Goodwill is classified according to the following criteria: by types of relationships, if it is possible to alienate goodwill in favor of other persons, by the degree of impact on the financial result of the enterprise, by forms of manifestation in the reproduction process, by the degree of control over acquired goodwill, by the level of manifestation in the economic system - goodwill enterprises, regional goodwill, national goodwill.

For the purposes of this term paper examines the economic, created, positive goodwill of the bank.

An analysis of various methods for assessing goodwill made it possible to identify the most appropriate method for assessing the goodwill of OJSC URSA Bank.

It is a method of evaluating the difference between the value of a company and the market value of all its assets.

Analyzing the banking sector, the directions of the bank's activities and its reporting, we conclude that there were no analogues of such mergers in the Russian market, and this justifies the rejection of the comparative approach. The use of the cost approach in this case is unreasonable, since we are evaluating an ongoing business. Since the bank is developing steadily and actively, therefore, the most objective results will be given by the income approach. But since URSA Bank, as a new legal entity, has been operating for only two years, it is impossible to conduct a retrospective analysis and, accordingly, forecast cash flows, which is required by the discounted cash flow method. Therefore, when evaluating goodwill by the method of exceeding the market value of the business over the value of its assets, it would be advisable to use the profit capitalization method.

In the third chapter, we calculate the market value of goodwill required to be reflected in IFRS and evaluate the impact of an increase in the value of goodwill on the value of issued shares.

Based on the assessment of goodwill, it is possible to evaluate the effectiveness of financial decisions that lead to a change in the value of the enterprise. Monitoring allows taking into account the impact of goodwill on the increase in the value of the enterprise, as well as the role of subjective assessments of investors and other counterparties in making financial decisions, with the lowest labor costs and more quickly diagnosing and correcting financial decisions.

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31. http://www.cbr.ru.

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Appendix 1

Explanation of indicators in the formulas given in table 4:

Lam - highly liquid assets, i.e. financial assets that must be received within the next calendar day and (or) can be immediately claimed by the bank and (or) if necessary, sold by the bank in order to immediately receive funds, including funds on correspondent bank accounts with the Bank of Russia, in banks of countries from among the "group of developed countries", the bank's cash desk.

OVM - obligations (liabilities) on demand, for which the depositor and (or) the creditor may present a demand for their immediate repayment.

Lat - liquid assets, i.e. financial assets that must be received by the bank and (or) can be claimed within the next 30 calendar days and (or) if necessary, sold by the bank within the next 30 calendar days in order to receive funds within the specified terms.

Ovt - liabilities (liabilities) on demand, for which the depositor and (or) creditor may demand their immediate repayment, and the bank's obligations to creditors (depositors) due within the next 30 calendar days.

Credit claims - credit claims with a remaining term to the maturity date of more than 365 or 366 calendar days, as well as prolonged ones, if, taking into account the newly established terms of repayment of credit claims, the time remaining until their repayment exceeds 365 or 366 calendar days;

ML - obligations (liabilities) of the bank on loans and deposits received by the bank, as well as on the bank's debt obligations circulating on the market with a remaining maturity of more than 365 or 366 calendar days.

Valuation of goodwill from RUB 30,000

Goodwill valuation and other unidentifiable assets is usually associated with some identifiable asset, including a trademark or brand. For most tasks goodwill valuation is to determine the set of those elements of business or personal qualities that encourage customers to apply specifically to this enterprise and which bring a profit to the firm in excess of what is required to receive a reasonable return on all other assets of the company, including income on intangible assets that can be identified and separately estimated.

The assessment of goodwill is based on two main methods:

• excess profits - an assessment of goodwill as a brand that helps the company to extract more profit compared to the situation if it sold an unbranded product;
• balance sheet - the value of goodwill is equal to the difference between the value of the business as a whole and the value of its assets, both tangible and identifiable intangible.

Goodwill in the business world is seen as the value of a firm's goodwill. Business reputation in the structure of intangible benefits is highlighted in accordance with Art. 150 of the Civil Code of the Russian Federation. Goodwill occurs when a company earns stable, high profits from its earnings above the industry average. Goodwill as an economic value is assessed and taken to the balance sheet only at the time of the change of ownership of the enterprise.

A large number of corporate mergers and acquisitions in the West, in which companies were acquired at much more or less than the value of assets, is clear evidence that there is something intangible, perhaps inseparable from the company itself, but fundamentally changing the value of the business. To do this, something usually use the term "goodwill", from the English Goodwill, which literally means "good will", i.e. the willingness of the buyer to pay more or less than the value of the corresponding share of the net assets of the acquired company. Business reputation or Goodwill, it can be both positive and negative. Thus, Goodwill (Goodwill) is the difference between the actual value of the company, or its corresponding share in the capital, and the acquired share in the fair value of its assets and liabilities as of the date of the transaction:

Sometimes goodwill is linked to exclusive ownership of a trademark. This type of intangible asset will have a definite useful life and is depreciable.

In order to assess the value of goodwill or goodwill, you must provide the following documents:

1. Copies constituent documents(Charter, Memorandum of Association, Registration Certificate).
2. Copies of prospectuses, reports on the results of the issue of securities (for joint-stock companies).
3. Activities and organizational structure companies.
4. Copies of lease agreements for real estate (if any).
5. Data financial statements for the last 3-5 years (or a possible number of previous periods): balance sheet, income statement
6. The last opinion of the auditor (if an audit was carried out).
7. Statement of fixed assets.
8. Inventory lists of property.
9. Data on all assets (real estate, stocks, shares of third parties, promissory notes, intangible assets, etc.).
10. Breakdown of accounts payable.
11. Breakdown of receivables: by terms of formation, by types of receivables, share of doubtful debts.
12. Information on the presence of subsidiaries, holdings (if any), financial documentation on them.
13. Plan for the development of the enterprise for the next 3-5 years, indicating the planned gross proceeds for goods / services, necessary investments, costs, net profit - by years.
The result of work on the assessment of goodwill or business reputation will be in accordance with all the requirements of the Federal Law of July 29, 1998 No. 135-FZ "On Appraisal Activities in the Russian Federation" and valuation standards that are mandatory for use by subjects of valuation activities, approved by Order of the Ministry economic development and Trade of the Russian Federation of July 20, 2007 No. 256 (FSO No. 1), No. 255 (FSO No. 2), No. 254 (FSO No. 3).

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How often do we apply for certain services or services to various companies that our friends advised us? Why do we buy products that are most actively advertised? It's not just that manufacturers spend a lot of money to improve their own reputation, bother with its assessment, and resell it to other owners, deliberately overestimating its value? We will talk about goodwill and the features of its accounting in the article below.

as a successful business

Goodwill - what is it? Literally, "goodwill". But we are not talking about that now. What does an entrepreneur need to run their own business? What is needed for it to be in demand and make a profit? Undoubtedly, a positive assessment from third-party organizations. Nowadays, this aspect of business is increasingly influencing the minds and behavior of the population. Because, as statistics in recent years show, it is precisely this that our legal entities are trying to justify in court.

Therefore, if any information discrediting the good name of a business entity has become public, then it has the full civil right to challenge the legitimacy of what happened in the manner prescribed by law. Business reputation, although it is a rather abstract concept, nevertheless, is a rather valuable intangible asset of an enterprise.

Goodwill: definition of the concept

Entrepreneurs invest heavily in brand development and advertising. Business reputation, or, as it is also called, goodwill (not to be confused with the goodwill of the filter), is quite expensive for business entities, and therefore it is valued at the appropriate level.

So what is this concept? Let's consider the question step by step:

• a strong team of good advertisers and a well-developed brand promotion strategy should always be the basis;
• further work is needed at the highest level to promote the company;
• as a result, the company must be distinguished by its good corporate culture and well-established relationships with counterparties.

In other words, goodwill is a general assessment of a business's performance, which as a result - due to its reputation - allows you to increase the volume of your own working capital because people want to consume this product and no other. It is interesting that many business entities tend to exaggerate their own importance, and this is quite fruitful for them - the value of the company increases markedly.

Interpretations of goodwill in economic theory

With the passage of time and the dynamics of business change, the interpretation of this concept has changed depending on external circumstances. For example, have you heard from your parents, and even more so from your grandparents, who lived, say, under Stalin, about such a term as goodwill? Nobody in the Soviet Union knew what it was. This concept simply did not exist. In the theoretical aspect, the term "business reputation" was listed, but it had rather a certain psychological definition. It could be defined as the cumulative opinion of consumers about a particular company, but at the same time, there was not even talk of goodwill as a valuable intangible asset. This is understandable - in the planned economy of that time, there was simply no need to expand this concept.

The term "goodwill" came to us from the United States, and there even a hundred years ago it meant a certain established value of business contacts, which subsequently could lead to a profit increase by several points. In other words, in America this intangible asset has always had a value.

How is it different from other assets?

What is goodwill according to This is a special intangible asset that has a number of specific features that distinguish it from others:

• under no circumstances can goodwill exist independently from a specifically linked company;
• it is immaterial, which means that its absence as such may not be noticed;
• goodwill has no initial input or operating cost, and in some reporting templates it is valued at a symbolic amount of a few dollars;
• if the value of other intangible assets in value terms is distributed according to the volume of output, then the amount of goodwill can be paid off at any time, and at the same time, as such, it will not disappear.

Goodwill as an economic category

Goodwill - what is it? This is a complex concept that can be classified according to several criteria. For example, in terms of how it can affect the financial statements of a business entity:

• positive - when we use it, we also get a good income;
• negative - accordingly, it not only does not bring profit, but also underestimates the estimated value of the enterprise as such.

Or, according to the form of existence, goodwill happens:

• created - accumulated over the years, through a competent marketing policy;
• accounting - is acquired for a certain cost in monetary terms and is included in the financial statements.

It can also be classified according to the documentary method of reflection in these characteristics of the company:

• market - when not only the acquisition price, but also the profit received is involved in the procedure for assessing its value;
• normative - when determining its value, the auction price on the market is also taken into account.

Income valuation methods

Often, the valuation method of goodwill is to determine the profit that it can bring to the enterprise. So, there are two income methods for determining its value.

For example, goodwill can be valued as the residual value between the difference in the total expressed value of an enterprise's assets and its full price. It is clear that there will be no problems with the first deductible - all you need to do is sum up all the indicators. As for the value of the business itself, it should be approached comprehensively: either apply a comparative analysis, or be based on profitability indicators.

Or business reputation can be determined on the basis of available excess profits. In this case, the main thing is to determine the planned profitability without using goodwill in business, and then calculate how much it can bring.

Other Goodwill Measurement Methodology

Business reputation can be assessed based on data about the business entity. So, for example, the cost of goodwill is calculated based on the volume of products sold:

(Net income received from operating activities- the level of profitability by industry * The total cost of goods that were sold) / Indicator of capitalization of other intangible assets.

You can also involve the cost price to assess business reputation. Such a calculation of goodwill is somewhat similar to the method of calculating excess profit, but now we are not evaluating the dynamics of changes in the latter, but how the application of the concept we are considering affects the overall cost.

And the last, least frequently used, is qualimetric. In this method, we evaluate overall utility activities of a business entity and compare with the value of direct goodwill.

Features of goodwill in different countries

So, as we have already found out, the term “goodwill” itself did not exist in Soviet Russia, but nevertheless, if we recall the tsarist times, the authority of this concept was still present, albeit behind the scenes. Imagine how local merchants would cope if they did not have a good business reputation among neighbors and residents of surrounding areas. And in our time, despite the active use of this concept in business, there are no legally regulated documents that determine the status of goodwill. But still, professional appraisers of business reputation are gaining wide popularity in Russia now, who will not only select the best way to calculate its value, but also carry out all the necessary calculations.

But in the USA, on the contrary, goodwill is not only actively taken into account in the development of one's own business, but is also regulated by law by the Ministry of Finance and the Internal Revenue Service.

The need to measure goodwill

Determining the value of goodwill often has good reasons, since this procedure is quite expensive and complicated. As a rule, it is carried out if the business is planned to be sold or bought in the near future.

Undoubtedly, the value of the company's tangible assets is a very important factor of influence, but it is equally important what reputation the manufacturer has earned over the years of its activity, how much consumers trust him, and how popular his product is. After all, as mentioned above, it is these factors that can significantly increase the value of a business.

Goodwill is also assessed in case of a merger or acquisition, since here it is also important to understand what things are going in hand. After all, if in an intangible aspect the deal is not profitable enough for one of the parties, then why conclude it?

How to prepare for a business reputation assessment

What is goodwill? This is primarily an intangible asset, and therefore it must be valued accordingly. So, for the procedure for determining the value of goodwill, the following documents are required:

• full financial statements in the context of the last three years;
• if any, the auditor's reports;
• a complete inventory of the material assets available in the company's possessions;
• other decoded and explained information about the property of a business entity;
• information on receivables in the context of contracts;
• if available, their full financial statements.

Every year, the service sector is becoming wider and wider: we are offered legal and accounting advice, and there are so many hairdressers and beauty salons that you can stumble upon them literally at every step! But this does not mean at all that each of these establishments brings unprecedented profits to its owner. First you need to earn a decent reputation, gain an impressive customer base. This is what the goodwill of the enterprise is all about.

Who needs goodwill the most?

Since there are not so many tangible assets on the balance sheet of such business entities, and in order to set a decent price for a property in the form of a cafe or a nail salon, it is necessary to offer the buyer a brand of the proper level. It is business reputation in this case that will take almost half of the cost of the enterprise.

Accounting for goodwill in Russia

Given the fact that many enterprises are successfully moving to International Financial Reporting Standards (IFRS), we will consider goodwill accounting in this aspect.

According to postulate No. 38, goodwill can be reflected only when buying or selling an enterprise, but not otherwise. Since it is incorrect to evaluate an asset, which, in fact, is practically not such, and it is very wrong to reward it with any one based on subjective considerations.

Moreover, in accordance with Standard No. 22, after the sale and purchase transaction, the recognized value of goodwill must be allocated to certain non-current assets. Since the value as such is paid for, it follows that it must be supported by something material. Often, the latter are fixed assets that have their own specific level of wear and tear.

What to do if goodwill is negative

Goodwill - what is it? This is an intangible asset that is not customary to identify and acquire separately from a business entity.

Sometimes situations arise when funds are paid for a particular enterprise, which in fact are less than the estimated value of all business assets suggests. In this case, the conclusion follows that goodwill played a decisive role here, and the transaction was completed at a loss to the seller.

Therefore, if a positive business reputation as an intangible asset is further distributed according to the value of fixed assets available at the enterprise, then a negative one, in turn, will be reflected in the balance sheet of a business entity under account No. 192. And, alas, nothing can be done with it before the next deal.

A modern firm consists mainly of intangible assets, some of which are recorded on the balance sheet, and some are not. Thus, the valuation of a business under these conditions is the valuation of intangible assets in a broad sense. The concept of intangible assets is used in accounting and financial accounting, in management and valuation activities, and the content of this concept is different in the national accounting standards of different countries and different types of professional activities. Goodwill or goodwill is also an intangible asset of an enterprise.

For most purposes, goodwill can be defined as a combination of those elements of a business or personal qualities that encourage customers to contact a particular enterprise and that bring a profit to the firm in excess of that required to generate a reasonable return on all other assets of the enterprise, including income on intangible assets, which can be identified and separately evaluated. In most cases, business goodwill is made up of business goodwill – business goodwill and personal goodwill. Additional profit is obtained as a result of the combined influence of these two elements.

In Russia, business reputation in the structure of intangible benefits is highlighted in accordance with Art. 150 of the Civil Code of the Russian Federation. There are several points of view of economists on the essence of the concept of goodwill. From an accounting point of view, business reputation (goodwill) is interpreted as the amount by which the value of a business exceeds the market value of its tangible assets and that part of intangible assets that is reflected in the financial statements. As an intangible asset, this value is put on the balance sheet at the time of purchase of the enterprise.

However, in Western countries practice shows that the market value of an enterprise can exceed the sum of its tangible and identifiable intangible assets by several orders of magnitude, and if earlier this value was characterized as the general goodwill of an enterprise, then in recent times there has been a tendency to characterize its structure. The structure of the goodwill of an enterprise is generally similar to the structure of intellectual capital, theories of which are currently very popular in Western economic literature. It includes both the company's market assets, and infrastructure assets, and its identified (but not included in the balance sheet) intellectual property, and human assets (personal goodwill).

Goodwill is present only when there is excess profit (although negative goodwill may be present from an accounting point of view) and cannot be separated from the going concern, i.e. cannot be sold separately from it. Goodwill occurs when a company earns stable, high profits, its return on assets (or equity) is above average, resulting in the value of the business exceeding its net asset value.

Internationally, the accounting for goodwill assets is governed by IAS 22 Business Combinations, which defines goodwill on an acquisition of a business as a payment made by the acquirer in anticipation of future economic benefits from assets that do not individually qualify for recognition in the financial statements, but for which the buyer is willing to pay upon purchase.

The main methods for assessing goodwill (goodwill).

1) Accounting method.

This method is applied only to the purchase of an enterprise, when the purchase price of the enterprise exceeds the value of tangible and intangible assets on the balance sheet, in which case the difference is attributed to the value of goodwill. In fact, this method helps to evaluate goodwill and other unidentifiable intangible assets using the "big pot" method.

2) Analytical method for assessing business reputation.

The main idea of ​​this method is that the intangible elements of intangible assets are hardly or not shown in accounting, thus the goal is to calculate these assets or "hidden" investments. The analytical method has the advantage of indicating the internal origin of goodwill, but it is difficult to analyze and calculate. Also, keep in mind that some items only have a value when they are combined. After all, business reputation itself is, first of all, a synthetic indicator.

3) Evaluation of business reputation using the indicator business activity.

This method is most commonly used in the west to value commercial enterprises. Usually, an indicator of business activity is sales volume (most often sales volume for the last three years), to which a multiplier is applied to assess business reputation. For example, for a bakery, this ratio is 70-80% of annual sales, and for a supermarket - 15-20%. However, evaluating business assets based only on sales volume is quite risky, so the appraiser must inquire about the financial results of the enterprise.

4) Method of excess profits.

The main method for valuing goodwill is the excess earnings method (valuation using the goodwill capitalization method). It is based on the premise that excess profits bring to the enterprise not reflected in the balance sheet, intangible assets that provide a return on assets and on equity, above the industry average. The method involves a direct comparison of the levels of profitability of the enterprise being valued and other enterprises-analogues of the industry with the subsequent capitalization of that part of the difference between them, which is not explained by the influence of tangible assets

The disadvantage of the method is that it is not universal, since an enterprise may not receive excess income, but still have goodwill, and, on the other hand, have excess income for a short time that is not directly related to goodwill. companies.

Task 8

Determine the most effective investment project using the reduced cost method. The main indicators of investment projects are given below.

Let's determine the most effective investment project according to the following formula:

Z \u003d C + En * K,

C - annual production costs of the product;

K - investments;

En - coefficient of economic efficiency, taken equal to 0.1.

• 1 project: (0.15 * 500,000) + 0.1 * 25,000 = 77,500 thousand rubles.
• 2 project: (0.17 * 1,000,000) + 0.1 * 30,000 = 173,000 thousand rubles.
• 3 project: (0.16 * 2,000,000) + 0.1 * 20,000 = 322,000 thousand rubles.

Conclusion: the most effective investment project is option 1, that is, the lowest reduced costs.

How to value goodwill

Any company has not only material values, such as buildings, equipment, stocks of raw materials and materials, cash, etc., but also a business reputation, an established circle of customers and trusted suppliers, trademarks and brands, market fame and others. factors that, at first glance, are very difficult to assess. However, when selling a business, when buying a ready-made company, in mergers and acquisitions, and simply for competent management of the company's value, you need to know how much the company's intangible values ​​cost. Learn how to evaluate them in our material.

There is no generally accepted definition of the term "goodwill". This concept is interpreted as reputation, respect, respectability, fame. According to the authors, goodwill is primarily public opinion in relation to names, styles, premises, trademarks, logos, projects, products and any other items owned or controlled by the company, as well as relationships with clients and customers. The sources of goodwill can be both a specific master in a beauty salon, to which people go, and high-quality cuisine in a restaurant.

In accordance with the BSV-I1 standard adopted in 1988 and supplemented in 1991 by the American Society of Appraisers (ASA), goodwill is defined as the "good name" of the company and includes intangible assets of the company, which are made up of the prestige of the enterprise, its business reputation , customer relationships, locations, product lines, etc. These factors are not separately singled out and are not taken into account in the company's financial statements, but serve as a real source of profit.

Goodwill is intangible, its presence or absence can only be judged by business practices. For example, if among a number of companies operating under equal conditions (territorial, price, service), one attracts more customers than the others, this indicates that its goodwill is more expensive or “stronger”. For business, the formation of brand awareness, brand awareness, and a permanent clientele is of great importance. Creation of strong brands, expansion of the client contingent, recognition of trademarks, requires the maintenance of strict quality standards and certain behavior towards clients and partners, the introduction of a system of bonuses for regular customers, etc. All of these activities should contribute to the formation of goodwill.

Why Valuate Goodwill

When should goodwill be assessed? There are several situations where this is necessary:

Purchase (sale) of a business;

Mergers and acquisitions;

Making management decisions (when managing the value of the company).

Personal experience

Hamid Mamadzhanov, Chief Researcher, Institute for Certification and Evaluation of Intellectual Property and Business, Doctor of Technical Sciences. Sciences. (Moscow)

First of all, you need to evaluate goodwill when buying and selling enterprises. Business is not only fixed assets and other property recorded on the balance sheet, but a skillfully organized organizational and economic structure, experience effective management, stable customers, well-established distribution channels, established business relationships, trained staff and much more, together, provide sustainable income. Therefore, the owner of the company is interested in getting more for his business than the total value of all assets of the enterprise. And, of course, the buyer will want to check what he is paying for if he knows that the total value of the assets is significantly lower than the price for which the business is being sold.

Evgeny Neiman, Vice President Russian Society appraisers, President of the International Academy of Appraisal and Consulting, Ph.D. those. Sciences. (Moscow)

I have performed goodwill valuation when it was necessary to determine the amount of compensatory losses caused by the disposal or closure of the business. I can give a very specific situation. When laying the third transport ring, the building in which the restaurant was located fell under the demolition. The restaurant had a certain circle of visitors, an established reputation, and so on. Compensation for the restaurant was assigned in the amount of the book value of the company's assets, which, of course, did not suit the business owners. In order to justify that the proposed price cannot be fair, it was necessary to evaluate the goodwill and include it in the cost of the restaurant as a ready-made business. Further resolution of the issue took place as a result of bargaining between the owners and representatives of the administration.

Evgeny Zlatokoltsev, entrepreneur, sold his business in 2003 (restaurant in Moscow)

When selling a restaurant, the real value of the business was 50% higher than the cost of the restaurant, calculated as the sum of all the costs of its creation. Largely due to the value of goodwill. At the same time, I believed that my restaurant did not have goodwill as such. However, the evaluation showed the opposite. This allowed the restaurant to be sold at a much higher price.

Revaluation of goodwill: foreign experience

Many foreign companies, which have been involved in major mergers or acquisitions in recent years, are now forced to re-evaluate goodwill, as the price of such transactions looks too high. Media holding AOL Time Warner has already posted a write-down of $54 billion to reflect a general decline in its market value. In large part, this was due to an erroneous assessment of the value of goodwill (built on inflated forecast values ​​of income) during the merger of the Internet operator AOL and media holding Time Warner. Other large corporations have said they are going to do the same: Clear Channel will write off $15 billion to $25 billion, Vivendi Universal $12.3 billion to $13.2 billion, Qwest $20 billion to $30 billion, World Com will 15 to 20 billion US dollars. Experts estimate that after the completion of these processes, more than $100 billion in asset values ​​will simply evaporate. Of course, this will have an adverse effect on the stock market.

When managing a company focused on increasing its value, it is also necessary to evaluate goodwill2.

Personal experience

Khomutov Vladimir, leading consultant of the Consulting Center "STEP"

When making certain strategic decisions, the owners are guided by what position the company will take in the market. And goodwill with some degree of assumption can be called a characteristic of the company's position in the market. That is, if a company takes a stable position in the market, this indicates a strong goodwill, an unstable position - a weak goodwill.

How to value goodwill
The entire set of intangible assets at the disposal of the company can conditionally be divided into three groups. The first includes intangible assets that are inseparable from the enterprise, such as: availability of trained personnel; achievements in the field of advertising and promotion of their products; advantages of the territorial location; business reputation. Assets in this group typically have an indefinite life and are valued collectively. Due to the fact that it is impossible to determine the useful life and depreciation rate for them, such assets are considered non-depreciable.

The second group is intangible assets inseparable from the employee of the enterprise. These include the personal reputation and professional skills of a particular employee, including personal know-how, commercial ability, talent in financial operations, etc. Like the assets of the first group, these intangible assets are inseparable from the employee, do not have a useful life and are not depreciated.

The third group is intangible assets generally separable from the enterprise, such as trade marks, trademarks, trademarks, copyrights, patents, etc. Any asset in this group can be valued separately and most of them have a certain life. Such assets are considered depreciable and can be put on the balance sheet of the enterprise.

There is no consensus among valuation professionals as to which assets are included in goodwill. According to the authors of the article, in the narrow sense of the word, goodwill is only those assets that belong to the first group in the above classification. In the future, in the article, the company's goodwill means assets inseparable from production.

There are several ways to assess the value of a company's goodwill, which are most widely used in Russian practice:

Valuation of goodwill as an assessment of the difference between the total market value of the company's assets and the value of the entire business;

Valuation of goodwill in terms of excess profit;

Valuation of goodwill by sales volume.

Let us consider in more detail the listed methods for estimating the value of a company's goodwill.

Valuation of goodwill as an estimate of the difference between the company's value and the market value of all its assets

The assessment of goodwill as the difference between the market value of a ready-made business and the value of the company's assets can be conditionally divided into two large blocks.

First, you need to calculate the market value of all the assets of the company. Determination of the market value of the total assets of the enterprise is based on the principle of maximum efficient use. That is, the assessment is carried out on the assumption that the assets are used in the most efficient way, while such use is physically possible, reasonable, justified and lawful. At this stage of work, coordinated activities of the appraiser and accountant are needed. The accountant must determine which of the company's intangible assets can be separated and put on the balance sheet. The remaining intangible assets will form goodwill.

Secondly, you need to determine the value of the entire business as a whole, using either a comparative or income method of valuation. The choice of one or another approach depends on the availability and reliability of the information used in the assessment. If during the assessment there is a database of real sales of similar businesses, then preference will be given to the comparative method of estimating the value of the business, if such information is not available, then the business is primarily perceived as a tool for generating income and is determined by the income method.

After the assessment of the total assets of the company, including intangible assets that can be put on the balance sheet of the enterprise, and the market value of the company is determined, goodwill is determined as the difference between the two results of the assessment.

Example

The valuation of business and goodwill was carried out for the largest network of beauty salons Persona Lab. The total value of the assets of one of the salons is 390 thousand US dollars. As a ready-made business, the salon was valued at $920,000. The high estimate of the cost is due to the fact that the new owner, acquiring the salon, received not only a beauty salon, but the opportunity to use the well-known trademark, streamlined business processes and other clear competitive advantages. That is, in the case of Persona Lab, when acquiring a salon, the new owner first of all acquired its goodwill, which amounted to $530,000 ($920,000 - $390,000)

Accounting aspect

In accordance with Russian accounting standards, goodwill (goodwill) is defined as the difference between the purchase price of an organization (as an acquired property complex as a whole) and the balance sheet value of all its assets and liabilities.

The acquired business reputation is taken into account on the balance sheet and amortized over 20 years (but not more than the life of the organization). In the event that the acquired goodwill of the company is negative, it is evenly attributed to financial results companies as operating income.

Valuation of goodwill in terms of excess earnings

The goodwill valuation methodology, which involves the calculation of excess profit, is based on the assumption that if one enterprise receives more profit per unit of assets than a similar enterprise in the same industry, then this means that it is its goodwill or business reputation that brings additional profit to the enterprise.

The method for determining goodwill by the excess profit method was based on a concept developed by the IRS and introduced by the US Department of the Treasury in 1920. It was assumed that the assets of all companies bring the same profit. Thus, having determined the standard profit per unit of assets, it is necessary to compare it with the real profitability of assets and determine the volume of unrecorded assets, that is, goodwill. instruction tax office U.S. No. 68-609, 1968 rates of return for tangible and intangible assets were set by directive. For low-risk businesses, 8% is the rate of return for tangible assets and 15% for intangible assets. For enterprises with a high level of risk - 10% and 20%, respectively.

In Russian practice, there are no fixed profit ratios of this kind, which, on the one hand, complicates the assessment, and on the other hand, as a result of a careful selection of analogue enterprises, it makes it possible to increase the reliability of the assessment and avoid the tolerances inherent in broad generalizations. When selecting enterprises analogues with which profitability can be compared, one should be guided by the following criteria:

The enterprise produces similar products (works, services);

Located in the same locality (region, district);

Has the same production capacity.

The management of CJSC Angara decided to evaluate the company's goodwill using the excess earnings method. The company's net assets amounted to 400 thousand US dollars, and the annual net profit - 80 thousand US dollars. Thus, the return on net assets is 20% (80/400x100%).

As a result of the study, it was determined that the return on assets of similar enterprises is on average 15%, that is, the profit of Angara CJSC is 5% higher than the average for similar enterprises. According to the valuation method from the standpoint of excess profit, such a discrepancy arose due to the fact that part of the assets of CJSC Angara, namely goodwill, was not taken into account.

Accordingly, in order to get $80,000 in profit at a 15% return on assets, the company would need to have assets worth $533,000 (80/15%). From this we can conclude that the value of the company's goodwill is $133,000 ($533,000 - $400,000).

Valuation of goodwill by sales volume

To use the method of assessing goodwill by sales volume, you need to know the average industry profitability ratios. The company's goodwill is calculated using the formula:

GV = (NOI – QfxRq)/Rg, where

GV - goodwill;

NOI - net operating income from the company's activities. Calculated as gross income minus operating costs and reimbursement costs (for current repairs);

Rq - industry average profitability ratio of product sales;

Rg - coefficient of capitalization of intangible assets (the ratio of the company's profit to the value of intangible assets recorded on the balance sheet).

Qf is the cost of goods sold.

The volume of shipped products of the company is 200 thousand US dollars. The company has a net operating income of $40,000 and a return on intangible assets or capitalization ratio of 15%. The company, after conducting research, found that the average profitability of similar products is 5%. Based on these data, the company's goodwill was calculated, which amounted to 200 thousand US dollars ((40 thousand US dollars - 200 thousand US dollars * 0.05) / 0.15).

As with the previous method, the main problem in applying the sales volume method is related to the difficulty of obtaining external data, in this case, the industry average profitability ratio. Therefore, the choice of goodwill valuation method depends, first of all, on the availability of information that the company has.

Personal experience

Vladimir Khomutov

Valuing goodwill requires a significant investment of time, effort and money. Therefore, when choosing methods, one should be guided by the fact that the costs of the assessment will not exceed the value of the information received.

The role of goodwill in company value

From the point of view of the impact of goodwill on the company's value, all small and medium-sized businesses can be divided into three main groups: - goodwill is a significant, but not the main component of the value;

Goodwill has not yet been established as a profit generating factor.

The first group includes, for example, the Aspect-Modifier company, a fairly well-known manufacturer of auto chemical goods. Experts of the "Ready Business Store" valued it at $120,000. Back in 1997, the company occupied about 50% of the domestic automotive chemicals market, but by 2001 the company was able to retain only 8%. The total cost of acquiring assets can be estimated at $130,000, but these assets have narrow specialization, which means they are low-liquid and have a low selling price. The final value of the business was largely formed by intangible assets - namely, a trademark recognizable throughout Russia, technological documentation, positive expert opinions from leading research centers. But most importantly, consumers remember how just a few years ago, they literally lined up in line for the products of the Aspect-Modifier company. Given this, potential investors see great development prospects in the company.

The second group includes companies whose goodwill ranges from 25% to 40% of the cost. First of all, this includes consulting, appraisal and law firms. Unfortunately, there is no data on their evaluation on the market. This group also includes beauty salons, restaurants and other enterprises operating in the service sector. Both those and other companies begin to bring stable profits only if they form a stable clientele and a certain reputation, that is, goodwill. Companies operating in this market segment are among the most sold and bought. As an example, one well-known Moscow restaurant can be cited, the value of tangible assets of which amounted to 500 thousand dollars, and the liquidity of some of them was doubtful. For example, a $30,000 pony-skin sofa isn't easy to find a buyer for. At the same time, the restaurant was valued at $800,000. The place's popularity, its elite image, and a unique concept for the Russian restaurant market played a role here. All these factors made it possible to predict a payback period of two years, making the restaurant one of the most attractive investment proposals on the market.

The third group is little-known and "unpromoted" companies. Due to the rather inefficiently formed goodwill, their owners cannot expect to receive a high price for their business. An example is the company "Daris", engaged in the production of chips. Its estimated value was $120,000, $115,000 of which was tangible assets. At the same time, studies show that the market for snack products, which includes chips, is far from being saturated, and companies that have correctly built their policy and managed to make their trademark recognizable can achieve a goodwill value comparable to the value of tangible assets.

Russian features goodwill estimates

The current state of the goodwill valuation market and the use of its results in Russia leaves much to be desired. This is associated with a number of problems. The lack of reliable information about the enterprise (an assessment carried out on the basis of official financial statements gives a result several times lower than the real one) makes the work of appraisers difficult; However, the mistakes made Western companies when determining goodwill, it indicates the need to improve valuation methods and put them into practice. Should contribute to the wider use of goodwill valuation and the increasing orientation of business leaders to increase the value of their companies, as one of the main strategic goals.