Valuation Date in the Process of M&A

Valuation for M&A and other transactions is peculiar topic. Quite often it's the business valuation translated into compensation that causes the discontent of the leaving shareholders and it is the valuation analysis that is opposed and becomes a subject of litigation at court. The value drivers like earnings, profit margin or discount rate are usually discussed. Another important variable - the valuation date - may stay unchallenged. Even though it may seem rather a technical matter only, the task to choose a proper valuation date is a cornerstone of every valuation analysis. The facts presented in this paper suggests that the choice of the valuation date is not solely formal, legal issue, but it obviously has a material impact to the rights of individuals, i.e. owners of companies, and also to the financial statements of the companies involved. It is therefore not correct to talk about the well known value drives and leave the valuation date in the background. In fact, it's exactly the opposite - the date of valuation determines the value drivers, and also fixes the premises and circumstances, regardless of whether the appraiser decides to use valuation models based on market comparison, DCF or asset-based models.