At any stage of the company’s development, an accurate expert evaluation of the assets, the value of the company, and the market position of the brand is important. This, in turn, allows the company’s management to make quick decisions about the future of the existing business and, if necessary, even to change priorities and reorder the structure.
The expert group of “SME” LLC has extensive practical experience in the field of valuation and consulting services. We provide our customers with accurate and objective information on evaluation of investments, valuation of movable and immovable property, valuation of the company, the real market position for partners, consumers and competitors, as well as the current situation in terms of brand reputation. Owing to a rich portfolio in various sectors of the economy, our experts promptly advise the company’s management to pay attention to the areas of greatest risk when working on any project.
Evaluation Services in Azerbaijan
“SME” LLC offers services in evaluation of any type of movable and immovable property, vehicles, enterprises, other types of property and damage caused as a result of insured events, by various methods in accordance with international standards and principles of assessment based on Appraisal Activities Act of the Republic of Azerbaijan and other legislative acts. Evaluation services, promptly provided at a high level by professional specialists and experienced expert appraisers, are carried out officially on the basis of requests from legal entities and individuals.
Cost valuation means determination of the value of the subject of valuation at a certain point according to the selected valuation standards. As a rule, property valuation is divided into 4 main groups:
- Assessment of the value of the enterprise (business);
- Real estate valuation;
- Evaluation of equipment (including car and other vehicles);
- Valuation of intangible assets and intellectual property
Depending on the purpose of evaluation, the following types of values are used in implementation of evaluation activities:
- Market price
- Investment value
- Liquidity value
- Cadastral value
The legislative framework for valuation activities in the Republic of Azerbaijan:
- The Civil Code of the Republic of Azerbaijan approved by the Law of the Republic of Azerbaijan No. 779IQ dated December 28, 1999
- Valuation Activities Act of the Republic of Azerbaijan No. 510-IQ dated June 25, 1998 (as amended by Law on April 20, 2012, No. 336-IVQD)
- Assessment Standards and Norms, Professional Appraisers Training Rules, approved by the Resolution of the Cabinet of Ministers of the Republic of Azerbaijan No. 107 dated June 27, 2007
- Procedure for Calculating the Purchase Price of Real Estate Purchased for State Needs, approved by the Resolution of the Cabinet of Ministers of the Republic of Azerbaijan No. 54 dated April 04, 2009;
- Standard Requirements for Issue by Authorized Credit Organizations of Mortgage Loans Refinanced by the Azerbaijan Mortgage Fund under the Central Bank of the Republic of Azerbaijan, approved by the decision of the Board of the Central Bank of the Republic of Azerbaijan dated February 09, 2006 (Minutes No. 3);
- Rules for Maintaining the Registry of Professional Participants in the Insurance Market, approved by order of the Ministry of Finance of the Republic of Azerbaijan No. İ-110 dated November 14, 2008.
In general, according to the current legislation of the Republic of Azerbaijan, evaluation can be carried out both voluntarily and forcefully. In valuation activities, 3 main approaches (methods) are used:
Cost approach is a property valuation method based on determining the cost of creating, changing and using property, taking into account all types of depreciation. The cost approach implements the principle of replacement which is expressed in the fact that the buyer does not pay for the finished object more than for creating a new, equally profitable object. The cost approach in evaluating machinery and equipment is to pay the cost of the full reproduction (complete replacement) of the valuation subject, subject to deducting the cost of losses of all types of depreciation and impairment. When determining the full cost of reproduction and replacement, all expenses are taken into account, including the cost of transportation, freight transportation, installation, commissioning, etc. The key element in determining the full cost of reproduction and replacement is the production cost of an object that is identical and similar to the valuation object (production costs)
Application of the income approach is carried out as a result of forecasting future income for several years. In most cases, this approach is not used in determining the cost of machinery and equipment, since the income is obtained as a result of the entire complex operation. An exception is objects that can themselves generate income (printing and duplicating equipment, a small bread factory, trucks, etc.). The cost of machinery and equipment, estimated using the income approach, is determined as follows: the net income of the production complex is calculated; the residual method determines the part of income related to the machinery complex; the capitalization method or a decrease in cash income measures the value of the entire machinery fleet; the value of individual objects is calculated at the carrying amount.
Suitable sales comparison approach is a set of cost evaluations of the property being valued, based on comparing the property being valued with a similar property whose transaction prices are known. The basis of this approach is that the value of the property being evaluated is determined directly according to the selling prices of similar objects. Each comparable selling price is compared with the selling price of the property being evaluated. It should be noted that evaluation of any type of property is required during mortgaging, buying and selling, privatizing, distributing, renting, insuring, taxing, determining damage, putting up for auction, liquidation of a legal entity, returning property for state needs and in other cases.
“SME” LLC offers services for determining the official value of the following valuation items:
- ON REAL ESTATE PROPERTY
- Private residential houses
- Land allocated for construction of non-residential buildings and multi-storey residential buildings
- Non-residential areas
- Agricultural and industrial vacant lands
- Production facilities and barns
- MACHINES AND EQUIPMENT
- Series production equipment
- Special or custom equipment
- Technological lines
- Construction and road equipment, lifting vehicles
- Computer equipment and communications
- Small enterprises
- Medium-sized enterprises
- Large enterprises
Business evaluation is carried out by “SME” LLC on the basis of Certificate of the Azerbaijan Society of Appraisers.