IBBI Registered Valuer Fees and Costs in India

When a company, investor, lender, or other stakeholder needs a valuation report, one of the first questions is often: “How much does a registered valuer in India charge?”

There is no one size fits all standard fee that applies to any specific valuation assignment. Cost is determined by: asset type, valuation purpose, assignment complexity, amount of information available, location, valuation approach/methodology and time and expertise required.

The remuneration of a registered valuer shall be transparent and proportional to the valuation work done, in accordance with the Companies (Registered Valuers and Valuation) Rules, 2017. Fees and other charges shall also be transparent and disclosed under a written agreement with a client.

What Is the Fixed IBBI Registered Valuer Fee?

No. IBBI does not prescribe a flat fee for all registered valuation reports.

The professional fee is normally negotiated between the valuer and the client depending upon the scope of work and complexity of the valuation assignment. The fee should be openly agreed and reasonable for the work carried out. The valuer would not be able to charge for any sub-sequential fees or costs unless they were specific to the written report or Contract. For example the fee for valuing the share capital of a small private company may be quite different to the fee for valuing the share capital of a large business, portfolio of properties or specialised plant and machinery.

What Determines Registered Valuer Fees in India?

Asset Class. IBBI registered valuers work across asset classes including: Land and Building, Plant and Machinery, Securities or Financial Assets. You can access the IBBI's search function for registered valuers on their website and look for a reregistered valuer by asset class.

The valuation purpose - The fee may depend on whether you need a valuation to support an internal business decision as compared to one needed for a transaction, filing with a regulator, merger, reporting need, or legal matter.

The amount of complexity of business or asset involved. A simple, straightforward valuation with traditional books and records will take much less time to complete than a valuation involving many subsidiaries, a complex capital structure, securities such as preference shares and convertible securities, or many intangible assets.

The valuation method and the ensuing analysis can also make a difference in the cost. For instance, a DCF valuation may need in-depth financial models, working capital, capital expenditure, discount rates and terminal value.

What Costs Are Usually Included?

The professional valuation fee is just one aspect of your total cost. Your engagement may also include: site visits, travel, technical specialists, data gathering, market research, legal or financial review and any other expenses out of your pocket.

An asset valuation may require a site visit or visits to gather equipment, machinery or land and buildings data. It may also involve more detailed financial modelling and analysis of shareholder rights. Such additional costs should be specified and explained in the terms of engagement.

Example of Valuation Costs Simple

Imagine if a company is looking to have its shares valued by a registered valuer for a transaction.

The professional fee settled with the valuer is ₹1.50 lakh and travel and other out-of-pocket expenses have been agreed at ₹20,000. If GST is levied at applicable rate it shall be charged separately.

Hence the total payable amount would be based on:

Professional Fee + Approved Expenses + Applicable Taxes

The key point is that the client should be made aware of the fees prior to the valuation assignment commencing. Actual fees will vary based on the size and complexity of the engagement.

Can a Registered Valuer Charge a Success Fee?

No. The Model Code of Conduct says the independent valuer shall not charge a success fee. This is relevant because the valuation professional should be independent and should not be motivated to deliver a specific result in a valuation.

For instance, a valuer should not accede to be paid a higher fee as a result of the valuation being a certain figure or simply because a transaction occurs.

Why Can Two Valuers Charge Different Fees?

It is quite usual for two registered valuers to submit differing fees for the same wide ranging assignment. One may be able to utilise less detailed financial modelling or follow different research procedures, site visits or required speciality expertise. Another may have a different scope of work.

Hence, the lowest quote does not necessarily mean the best value. Clients should also take into account the valuer's relevant asset-class registration, experience, scope of work, methodology, reporting requirements, timelines, and expected deliverables.

What Should Be Included in the Engagement Letter?

The engagement terms should detail, in plain language, exactly what the valuer has been asked to do and what the client will pay.

The scope should, under normal circumstances, define the following: - The asset to be valued, the purpose of the valuation, the valuation date, any deliverables, professional fee, taxes, reimbursable expenses, payment terms, timetable, and any assumptions, inquiries, and special limitations.

Having the fee structure clearly written down can save a lot of problems further down the line.

How Can You Compare Registered Valuer Quotes?

When making comparison between quotations, do not only consider the headline fee. IBBI for the required asset class IBBI has an online register which one can use to check registered valuers and their asset classes.

One quote might include site inspection, detailed financial modelling, a number of valuation techniques, and a lengthy report, another maybe a more limited assignment.

Additionally, pay attention to whether the following items are included or will be billed separately: Travel, experts' expenses, data expenses, taxes and other charges.

IBBI Registration vs Valuation Fee

IBBI registration fees are different from professional fee charged by registered valuer for valuation assignment.

For application registration – a non-refundable fee of: o₹5,000 for individual o₹10,000 for partnership entity or a company. These are different from professional fees to be paid by the clients for valuation assignments.

Conclusion

There is no set IBBI registered valuer fee in India for each valuation assignment. The fees charged for a valuation assignment are always negotiable and are determined depending on the assignment and other factors such as the type of asset being valued, time, scope, purpose, information needed.

A valuation engagement should also have appropriate documentation of the following: professional fee, expenses, any taxes, scope of work, deliverables and payment terms. The professional fee should be representative of the scope of work, commensurate with the scope of work and not linked to the valuation outcome. Hence, more than the lowest fee paid to registered valuer for all registered valuers, the critical factor that should be taken into account is the IBBI registration, experience, methodology and scope of scope of work for valuation sought.