Proposal of Determination of the Fair Market Value of Share

{{company_name}}

{{company_address}}

Phone: {{phone}}

Email: {{email}}

Website: {{website}}

Date:

{{date}}

TO:

The Board of Directors

{{company_name}}

FROM:

{{proposer_name}}

{{proposer_title}}

SUBJECT: Proposal for the Determination of the Fair Market Value of Shares in {{company_name}}

This proposal outlines the methodology and process for determining the Fair Market Value (FMV) of shares in {{company_name}} ('the Company'), for the purpose of {{purpose_of_valuation, e.g., share transfer, employee share scheme, exit event}}.

1. Valuation Date

The valuation will be performed as of {{valuation_date}}.

2. Valuation Methodology

The Fair Market Value of the shares shall be determined based on a comprehensive assessment using generally accepted valuation methodologies. The primary methodologies considered will include:

a. **Discounted Cash Flow (DCF) Method:** This method will project the Company’s future free cash flows and discount them back to the present value using an appropriate discount rate (Weighted Average Cost of Capital - WACC). Key inputs will include financial forecasts for {{number_of_years}} years, terminal value assumptions, and a meticulously derived WACC.

b. **Market Multiple Approach:** This method will involve identifying comparable publicly traded companies or recent transactions of similar private companies (if available) and applying relevant valuation multiples (e.g., Enterprise Value/EBITDA, Price/Earnings) to {{company_name}}'s financial metrics.

c. **Adjusted Net Asset Value (ANAV) Method:** This method will be considered if the Company is asset-heavy or in a liquidation scenario, adjusting the book value of assets and liabilities to their fair market values.

3. Key Assumptions and Inputs

The determination of FMV will rely on various assumptions and inputs, including, but not limited to:

a. Historical financial statements ({{number_of_years}} years) and management accounts.

b. Financial projections and business plan provided by management for the next {{number_of_years}} years.

c. Industry outlook, market conditions, and economic forecasts specific to {{country/region}} and {{industry_sector}}.

d. Capital structure of the Company and any specific shareholder agreements or restrictions on share transfers.

4. Valuation Process

The valuation process will involve the following steps:

a. **Information Gathering:** Collection of all necessary financial, operational, and strategic information from the Company.

b. **Financial Analysis:** Review and analysis of historical performance and future projections.

c. **Model Development:** Construction of valuation models based on selected methodologies.

d. **Assumption Validation:** Discussion and validation of key assumptions with management and the Board.

e. **Report Preparation:** Compilation of a detailed valuation report outlining the methodologies, assumptions, findings, and the determined FMV per share.

f. **Presentation and Discussion:** Presentation of the valuation report to the Board of Directors for approval.

5. Independent Valuer (Optional)

It is proposed that an independent professional valuer, {{valuer_name/firm}}, be engaged to conduct this valuation to ensure impartiality and adherence to professional standards. The valuer will submit their report directly to the Board.

6. Confidentiality

All information shared and generated during this valuation process will be treated with the utmost confidentiality and used solely for the purpose of determining the Fair Market Value of the Company's shares.

7. Recommendation

We recommend that the Board of Directors approve this proposal for the determination of the Fair Market Value of shares in {{company_name}} and authorise the necessary resources and engagement of an independent valuer, if applicable. The timely completion of this valuation is crucial for {{reason_for_urgency, e.g., upcoming transaction, compliance requirement}}.

SIGNATURES:

___________________________

{{proposer_name}}

{{proposer_title}}

Date: {{signature_date}}

___________________________

For and on behalf of the Board of Directors

{{board_representative_name}}

{{board_representative_title}}

Date: {{board_approval_date}}