Valuation and Modelling

As the leading valuation practice professional firm in Japan, PwC's valuation team provides high-quality services to companies in a wide range of industries. By helping our clients, we understand the value of their business, the value of different types of shares, the value of tangible and intangible assets and liabilities, and the effect of important management decisions on their value. We support management in M&A, intra-group transactions, capital allocation, capital expenditure decisions, and other aspects of management.

Better financial models are required to perform a variety of analyses, including value analysis. PwC's financial modelling team builds a fully tailored financial model that meets the business needs of each client to support their decision-making. We maximize the value of services provided to our clients by leveraging the latest modelling tools, theories, industry knowledge, and PwC's global network when we develop our financial model.

Transaction valuation

Enterprises face increasing pressure from stakeholders including shareholders, outside directors, and employees, and are increasingly seeking transaction valuation advice from third-party specialists to justify transaction prices as part of business reorganization or when considering M&A to accelerate growth strategies.

The PwC Valuation Team utilizes a variety of analytical methods that focus on industry-specific value drivers. This allows clients and stakeholders to have a better understanding of the potential value increase created by M&A deals.

In addition, as the number of cross-border transactions increase, sharing expertise with overseas PwC networks enables us to provide the best analysis to our clients for complex cross-border transactions.

Valuation for financial reporting purposes

As the use of fair value measurement for financial reporting purposes increases, the importance of valuation continues to increase for financial reporting purposes for management, shareholders, other stakeholders, external auditors, standards makers, and regulators.

PwC has professionals with extensive experience in valuation for financial reporting purposes and provides a customized approach and methodologies for our valuation service that is tailored to each subject asset.

We provide our services in accordance with Japanese GAAP, U.S. GAAP, IFRS, and other accounting standards, and have extensive experience in valuations for financial reporting purposes such as PPA for not only in domestic Japanese deals but also in cross-border deals.

Purchase Price Allocation (PPA)
Impairment test
Fair valuation of personal property (machinery and equipment)
Fair value valuation of other assets and liabilities

Purchase Price Allocation (PPA)

Accounting standards for M&A are becoming more complex year by year and may have a significant impact on profits and losses. As the use of fair value measurement for financial reporting purposes increases, it is more important than ever to understand the effect of M&A decisions on future earnings.

PwC more accurately assess the impact of the acquisition through the implementation of the pre-deal Purchase Price Allocation from the due diligence stage, and provides useful information for designing effective acquisition structure and management decisions.

We also provide fair value analysis for various assets and liabilities acquired through M&A, including tangible and intangible assets. We also work with professionals with expertise in accounting, taxation, and industry specific knowledge to meet financial reporting requirements of clients, including communications with auditors and helping to manage the overall process.

Impairment test

Unstable financial markets and economic conditions can affect the value of many assets on the balance sheet, and companies need to make decisions on complex issues related to the measurement and reporting of impairments. Failure to make appropriate decisions about impairment may result in losing credibility from investors, regulators, and other stakeholders.

PwC brings together valuation and accounting expertise to support impairment testing of goodwill, non-amortizable intangibles, tangible fixed assets, amortizable intangibles, and other assets.

We also provide valuation services for impairment testing or conduct independent reviews of the client's valuation model to help management address impairment issues appropriately from the viewpoint of auditors, funders, regulators and other stakeholders.

Fair valuation of personal property (machinery and equipment)

With the recent trend towards fair value in accounting, there has been an increase in the use of fair valuation of personal property in Japan, mainly for financial reporting purposes such as purchase price allocations and impairment tests.

PwC’s ASA accredited appraisers support companies wishing to assess the fair value of personal property in accordance with global standards such as the International Valuation Standards (ASA being the American Society of Appraisers, which is widely recognized internationally). We also provide support for subsequent audits, whether performed in accordance with Japanese Generally Accepted Accounting Principles (GAAP), the International Financial Reporting Standards (IFRS) or US GAAP.

Our fair valuation support extends beyond valuation for financial reporting purposes to include valuations in various other situations such as M&A, carve-outs, business turnaround and asset-based lending.

Fair value valuation of other assets and liabilities

In response to the increasing need for valuation of complex financial instruments, such as options, earn-out, preference shares, contingent claims and contingent consideration, PwC supports the evaluation of financial instruments for transaction, financial reporting and tax purposes based on our extensive experience.

We also support the valuation of employee stock options, which is required for financial reporting at the time of the issue of such stock options, the fair value analysis of unlisted securities, loans and other receivables, and portfolio valuation based on debtor information.

We also provide support for the fair value measurements for first time adoption of IFRS and retrospective Purchase Price Allocation and impairment testing for business combinations that have been carried out in the last two years since the first adoption of IFRS.

Modelling

We believe that most important decisions should be supported by a robust financial model. Our team of dedicated modelling experts design and deliver financial models tailored to your business needs and use our bespoke model build methodology to provide the comfort you need to make critical decisions for your business. Our team of technical experts is supported by a substantial analytical toolkit, which we combine with the latest modelling technology, industry expertise and access to PwC’s global network.

Value Consulting

Do you know the Value Impact of Important Decisions?

All business decisions impact value, but do you know by how much? Applying a value lens to your most important business decisions brings stakeholder value impacts into clearer focus to help:

Improve decision-making;
Build stronger consensus and alignment among stakeholders; and
Increase the return on capital generated by successfully executing your growth, portfolio optimization and capital strategies.

The result – improved governance and increased corporate value.

Drawing from our pool of valuation and modelling experts, we deliver independent value insight to inform leaders on where in their portfolio value is being created or destroyed (“Value Performance”) and on the value impact of critical business decisions (“Value Impact”).

Working closely with the strategy consultants of Strategy&, as well as technical and industry experts from within our Advisory business, we help clients develop strategies that will maximize corporate value.

Shareholder activism

Are You Prepared?

The sweeping changes to governance and stewardship implemented in recent years have been accompanied by a gradual increase in shareholder activism. Recent high profile successes of activists may encourage a second, potentially much larger wave of activism, both home-grown and foreign. Yet many business leaders, still adapting to ever-increasing focus on returns and value creation in Japan, are feeling unprepared to deal with the challenges from shareholder activists.

With our independent, objective viewpoint, we can act as a “friendly” activist, working with you to identify long-term value creating strategies, and help you respond effectively to an activist campaign.

Latest News

4 results

2022-09-20

The importance of ESG and sustainability in M&A (2022)

The 2022 edition of this report, which we began publishing last year, summarises the outcomes of a joint survey by RECOFDATA Corporation and PwC Advisory LLC. It explains recent and future M&A trends in Japan and related points of focus from the perspective of ESG and the SDGs.

2022-09-07

Global Crisis Survey 2021: Building resilience for the future (Japan insight edition)

PwC’s Global Crisis Survey 2021 examines the worldwide business community’s response to unprecedented social, economic and geopolitical disruption through the lens of the COVID-19 crisis, delivering insight into the state of crisis management and response across key regions and industries.

2021-09-02

Analysis of Japan’s private equity market and recommendations for Japanese companies – 2021

This report analyses investment, exit and fundraising trends in the growing private equity market in Japan, and provides related advice.

2021-09-01

The importance of ESG and sustainability in M&A

This report explains the status of M&A in recent years from the perspective of ESG and the SDGs, while also touching on future trends and the impact on corporate value.