Report – Work in Progress EBVS EUROPEAN BUSINESS VALUATION STANDARDS Dubrovnik, 18th May 2019 Danijela Ilic FRICS, REV Chair of EBVSC

EBVSC Following the Athens GA, the TEGoVA Board has decided to set up an EBVS Committee; final composition: Danijela Ilić – Chair (NAVS, Serbia) Vesna Stefanović – also Technical Writer (NAVS) Ella Dunphy (IPAV, Ire) Ivars Strautins (LIVA, Latvia) Allan Traynor (IRRV, UK) Daiva Albertaviciene (LTVA, Lithuania) Valery Yakubovsky (USA, Ukraine) Muharem Karamujić (BHPA, Bosnia-Herzegovina) Dr Jan Konowalczuk (PFVA, University Nadica Mladenovska-Krckoska (AIV, FYRM) Heinz Muhr (ARE, Austria) Bert van Scherpenzeel (VBO Makelaar, Netherlands) Adrian Vascu (ANEVAR, Romania) Alexander Weber (IVD, Germany) Sub group

Purpose of EBVS Support for valuers to assist business valuers to define with the Client the terms of engagement which clearly and accurately reflect the nature and purpose of the valuation and the extent of investigation so that result of valuation is clear and not misleading to enable business valuers to prepare coherent reports for presentation to their clients by providing clear guidance; to promote consistency by the use of standard definitions of value and approaches to business valuation: to place criteria for minimum content of the valuation reports that are consistent with national and EU legislation and accounting standards, and Support for users of valuations: • to enable users of valuations to know and understand more fully what is meant by particular terms and definitions so that they are better able to utilise the business valuations which have been prepared as a result of their instructions; • to provide a quality standard in terms of best practice as a benchmark for users of valuations; • to increase the awareness of the role of the business valuer; The rationale of providing a set of business valuation standards for Europe comes from a demand for valuations which are consistent with European company law requirements, with a quality that can be relied upon as a common benchmark by investors, the financial industry and valuers throughout the EU and beyond.

Task for the Sub group and EBVSC A technical sub-group to work on a first draft prepared by the Technical Writer 8th November 2018 – first EBVS draft was sent to the members of the sub group 18th January 2019 – first in-person meeting of the sub group in Belgrade There was one subsequent draft of EBVS ensuing from the meeting and discussion by e-mail EBVS to be finalised at a full EBVS Committee meeting during the TEGoVA Meeting in Dubrovnik in May The Chair will report on the state of progress of work at the Dubrovnik General Assembly. The full Committee will meet in mid-August to finalise the EBVS The text will be circulated to all TEGoVA members for a consultation by mid-September Finalised text submitted to TEGoVA members end of September in good time to seek approval by TEGoVA General Assembly in Sofia on 12 October. Pending TEGoVA General Assembly approval, date and place of launch of EBVS to be determined by the TEGoVA Board.

Draft 1 EBVS– 1st meeting of the Sub group Business valuation standards, not the asset valuation standards Structure of the EBVS Key Definitions Highest and Best Use analysis in connection with Disposal and Going Concern business scenario Business valuer…is a person, who shall demonstrate sufficient professional guarantees to be able to perform effectively the relevant valuation function. Terms of engagement, specifics comparing to the Terms of engagement for RE valuation The Valuation Approaches and Methods Reporting the valuation Ethical codex EBVGN 1, 2 & 3 .

Draft First Edition EBVS PART 1 – EUROPEAN BUSINESS VALUATION STANDARDS EBVS 1 Market Value and Bases of Value Other than Market Value EBVS 2 The Valuation Process EVBS 3 The Valuation Approaches and Methods EVBS 4 Reporting the Valuation EVBS 5 Valuers’ Code of Ethics and Conduct PART 2 – EUROPEAN BUSINESS VALUATION GUIDANCE NOTES EBVGN 1 – Control Premiums and Discounts for Lack of Control, Discounts for Lack of Marketability EBVGN 2- Discounts rates in Discounted Cash Flow Method EBVGN 3 - Valuation of Intangible Property PART 3 – EUROPEAN UNION LEGISLATION AND BUSINESS VALUATION

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