ASSESSMENT OF ENTERPRISE WITH FOREIGN DIRECT INVESTMENT

The post-covid world economic situation is changing strongly, in which the investment shift from China, India... to countries like Vietnam, Thailand, Malaysia... is quite strong. Vietnam is in the process of industrialization, modernization and international economic integration. Currently, economic resources are small and undeveloped. Therefore, the mobilization and use of foreign direct investment (FDI) capital plays an extremely important role in the development of the country.

Why do businesses calling for FDI need valuation?

• To be successful in calling for effective FDI, domestic enterprises need to prepare carefully and scientifically to attract foreign investors, one of the most important steps is to accurately determine the existing value. of that enterprise. Specifically, the business valuation means the following:
• Determine the legitimacy of that business
• It is the basis for assessing the size, financial capacity, business plan, brand coverage, position... of that enterprise in the market.
• The basis for investors to choose potential areas of development for investment as well as the feasibility of the investment, the profit from that investment.
• As an objective basis for comparison between enterprises calling for FDI

The process of valuation of FDI enterprises

1. Identify the problem

Set Appraisal Purpose

Classification of businesses, thereby determining the records to provide for the valuation of that business.

2. Planning for appraisal of prices

Determine the steps to be taken, personnel, time to perform the steps or the entire process of appraisal. The content of the valuation plan must clarify the documents required to collect market information, the characteristics related to the formation of enterprise value, the research progress, the outline of the report on the results. expertise…

3. Learn the facts of the business and collect documents

Actual survey at the enterprise: inventory of assets, survey of the actual production and business situation of the enterprise.

Collect information and documents from inside the enterprise: Production and business reports, financial - accounting - audit reports, Marketing, system of production units and agents, characteristics of the management team Executives, employees, workers, etc. In addition, we also pay attention to collecting information outside the enterprise, especially the product market of the enterprise, business environment, business industry, competitors, owners, etc. State government…

4. Assess the strengths and weaknesses of the business

For enterprises in general and enterprises calling for FDI in particular, the assessment of the strengths and weaknesses of the enterprise is very important. The aspects to focus on assessment include: production - business, technology - machinery, personnel qualifications, management apparatus and management capacity, debt capital, financial indicators, market, environment business school…

5. Determine the method of valuation, estimate the enterprise value.

The appraiser will rely on the collected information of the Enterprise to determine the most appropriate valuation method.

6. Report preparation and valuation report preparation

The preparation of reports and preparation of business appraisal reports is similar to that of other assets. The report on enterprise valuation results must clearly state:

- Objects of valuation must be clearly described. It is necessary to clearly state that the subject of valuation is the entire enterprise, the enterprises interests or a part of the enterprises interests, whether that interest belongs to the whole enterprise or is part of a separate property owned by the enterprise. Description of the valuation enterprise, including the following: Type of business organization; Business history; Outlook for the economy and the industry; Products/services; Markets and customers; Measures to overcome risks; Competition; Supplier; Assets include tangible and intangible assets; Human; Ownership management; Prospects for business…

- Valuation basis of value: the definition of value must be stated and determined.

- Valuation method

- Valuation assumptions and constraints, and important premises and assumptions for value must be stated.

- Financial analysis

- Result of valuation.

- Scope and time limit for valuation

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