Business Valuation in Bangladesh — The 2025 Strategic Playbook by TRW Law Firm

1. Home
2. Legal Services
3. Corporate & Commercial
4. Business Valuation

Featured snippet (quick answer)

Business valuation determines the fair economic value of a company or asset for deals, reporting, tax, disputes, financing, and strategy. In Bangladesh, robust valuations blend international standards (income, market, and asset-based methods) with local regulatory, tax, and foreign-exchange realities. A best-practice engagement clarifies purpose and standard of value, builds defensible models, tests assumptions with market evidence, and documents conclusions that withstand auditor, regulator, investor, and court scrutiny.

Why this guide — and why TRW

As Bangladesh’s largest cross-border law firm, TRW Law Firm advises conglomerates, high-growth tech, multinationals, DFIs, banks/NBFIs, and family offices on the valuation events that matter: acquisitions, divestments, joint ventures, fundraising, ESOPs, corporate restructurings, dispute resolution, and financial reporting. Our integrated Dhaka–Dubai–London–USA footprint lets us align Bangladesh law and commercial realities with global valuation practices, capital-markets expectations, and auditor demands—so your number is both credible and actionable.

Looking for broader corporate context? See our related guide on Corporate Governance on tahmidurrahman.com (internal).

1) What business valuation really answers

Valuation is not simply running a DCF. It’s a structured engagement that answers:

• Value for whom? (majority vs. minority shareholder; strategic vs. financial buyer)
• Value as of when? (pricing date, impairment date, capital raise date)
• Value for what purpose? (transaction, financial reporting, litigation, tax, regulatory, insolvency/solvency, ESOP)
• Under which standard of value? (fair value, fair market value, investment value)
• Under which premise of value? (going concern, orderly liquidation, forced sale)

Clarity on these five dimensions determines method selection, discounts/premiums, and the documentation burden.

2) Bangladesh backdrop: the rules and realities your model must respect

Even when the mathematics are universal, Bangladeshi practice has distinct guardrails:

• Financial reporting & audit: Listed and many large private companies report under IFRS as adopted locally; auditors expect consistent fair value frameworks for PPAs, impairment tests, and share-based payments.
• Regulatory & capital markets: Transactions, disclosures, and fairness rationales must satisfy investor-grade scrutiny; for listed issuers, board and committee minutes should clearly record valuation reliance.
• Tax & FX: Assumptions around transfer pricing, withholding, and foreign-exchange remittance evidence flow through to costs, cash conversion, and discount rates.
• Corporate secretarial: For share transfers and reorganizations, the valuation conclusion needs to be reflected correctly in board/AGM paperwork and filings.
• Banking & financing: Lenders in Bangladesh and offshore diligence valuation inputs—debt terms, covenants, and DSCR assumptions must be coherent with the model.

TRW’s role is to translate the number into a complete legal and documentary package that holds up in Bangladesh and abroad.

3) Valuation approaches and when to use them

3.1 Income approach (cash flow–based)

• Discounted Cash Flow (DCF): Projects unlevered free cash flows and discounts them at WACC; terminal value via perpetual growth or exit multiple.
• Best for: Operating businesses with visibility into margins, capex, and growth; infrastructure/energy with contracted cash flows.
• Watch-outs: Over-optimistic growth, inflation/FX pass-through, working-capital drag, renewal capex vs. growth capex, and regulatory resets.
• Dividend Discount Model (DDM): For banks/NBFIs and entities where dividends proxy economic value.
• Residual Income / Economic Profit: Useful when accounting earnings are the anchor; aligns with IFRS impairment discussions.

3.2 Market approach (comparables)

• Guideline Public Company (GPC): Apply trading multiples (EV/EBITDA, EV/Revenue, P/E) of peers—adjust for growth, profitability, leverage, and scale.
• Guideline Transactions (M\&A comps): Use precedent deal multiples reflecting control premiums and synergy expectations.
• Best for: Sectors with active peer sets (TMT, FMCG, pharma, consumer finance).
• Watch-outs: Local-market thinness, disclosure quality, and cycle timing; Bangladeshi private deals often require careful normalization.

3.3 Asset-based approach

• Adjusted Net Asset Value (NAV): Mark assets and liabilities to fair value; relevant for holding companies, investment entities, and stressed businesses.
• Replacement Cost / Reproduction Cost: For asset-heavy utilities and early-stage projects pre-revenue.
• Liquidation value: Used when going-concern fails or for downside/litigation scenarios.

3.4 Advanced lenses

• Real options: Value flexibility under uncertainty (deferral, expansion, abandonment).
• Probability-weighted scenarios / Monte Carlo: For binary risks (regulatory approvals, pipeline drugs, litigation outcomes) or path-dependent instruments.
• VC methods & scorecards: Early-stage startups (Bangladesh’s growing tech ecosystem) where cash flows are unpredictable.

4) Levels of value, control, and discounts/premiums

Understanding who holds the rights is crucial:

• Control vs. minority: Control brings ability to set policy, appoint management, decide distributions; control premium often applies in transactions.
• Discount for Lack of Control (DLOC): Applied when valuing minority interests where the holder cannot change strategy/dividends.
• Discount for Lack of Marketability (DLOM): Reflects illiquidity of private shares; calibrated using restricted-stock, pre-IPO studies, or option models.
• Synergy vs. stand-alone value: Strategic buyers may pay for synergies, but fair value for reporting typically excludes buyer-specific synergies.

TRW ensures your report clearly states which level of value is concluded and why, so auditor and counter-party challenges are pre-empted.

5) Building a defensible valuation model (TRW checklist)

• Purpose & standard of value defined in the engagement letter and report.
• Normalized financials: Strip one-offs, related-party anomalies, and COVID-era distortions; reconcile to audited statements.
• Revenue bridge: Volume × price × mix; explicit channel/contract and market-share logic.
• Cost and margin logic: Input costs, wage inflation, efficiency programs, and regulation.
• Capex & working capital: Renewal vs. growth capex; inventory and receivable turns grounded in Bangladesh practice (e.g., import cycles, LC/TT terms).
• Taxes & FX: Effective tax rate path, import duties, withholding, and repatriation mechanics; mid-cycle FX and pass-through.
• WACC construction:
• Cost of equity: Risk-free, equity risk premium, beta (global/sector adjusted), country/size premia (justified, not double-counted).
• Cost of debt: Market terms, covenants, and expected leverage; tax shields consistent with law and actual borrowing capacity.
• Capital structure: Target vs. current; sector norms; financing plan realism.
• Terminal value discipline: Growth ≤ long-term nominal GDP trajectory; or exit multiples triangulated to market comps.
• Cross-checks:
• Trading and precedent multiples; back-solve to implied metrics.
• Asset/NAV sanity checks; implied ROIC vs. WACC (value creation logic).
• Sensitivity & scenarios: Rate shocks, price caps, supply chain delays, regulatory resets, and FX.
• Documentation: Sources, assumptions, model versioning, and board approvals.

6) Sector playbooks in Bangladesh

6.1 Financial institutions (banks/NBFIs)

• Methods: DDM and Residual Income; P/B with ROE/Growth overlays.
• Drivers: Cost of funds, NPLs, capital adequacy, fee income, digital adoption.
• Pitfalls: Double-counting credit losses; ignoring regulatory buffers.

6.2 TMT & digital

• Methods: Revenue cohorts, unit economics, and scenario-weighted DCF; EV/Revenue and EV/GMV for marketplaces.
• Drivers: ARPU, churn, CAC/LTV, network effects, spectrum and licensing.
• Pitfalls: Overstated TAM; under-funded capex; platform take-rate pressure.

6.3 Manufacturing & FMCG

• Methods: DCF anchored by capacity utilization and price-cost spreads; EV/EBITDA and P/E comps.
• Drivers: Input costs (energy, imported raw materials), working capital, distribution reach.
• Pitfalls: Depreciation vs. renewal capex; duty/tariff shifts; seasonality.

6.4 Energy & infrastructure

• Methods: Project finance DCF; NAV; yield-based approaches.
• Drivers: PPAs/tariffs, fuel pass-through, offtake risk, capex schedules.
• Pitfalls: Construction slippage; debt sculpting mismatches; environmental compliance costs.

6.5 Healthcare & pharma

• Methods: Pipeline probability models; EV/EBITDA with growth and IP overlays.
• Drivers: Regulatory approvals, procurement pricing, capacity ramps.
• Pitfalls: Copycat pressure; working-capital spikes; price controls.

6.6 Real estate & hospitality

• Methods: Income capitalization (NOI-based), DCF, comparable sales; for hospitality—RevPAR-driven DCF.
• Drivers: Occupancy, rate, capex cycles, location/regulatory risk.
• Pitfalls: Over-leveraging; ignoring maintenance capex and brand fees.

7) Valuation use-cases we deliver

• M\&A buy-side/sell-side pricing, negotiation ranges, and fairness perspectives.
• Financial reporting: Purchase price allocation (PPA), goodwill impairment (IAS 36), share-based payment (IFRS 2), FV measurements (IFRS 13), and asset re-measurements.
• Tax & reorganizations: Group restructures, hive-downs, intercompany transfers, and ESOP grant pricing with 409A-style discipline adapted for Bangladesh.
• Disputes & arbitration: Minority squeeze-outs, shareholder oppression, warranty claims, expropriation/ICSID-style damages, lost profits, and business interruption—expert reports and testimony.
• Project bids & PPP: Bid-model reviews, return thresholds, and risk-sharing mechanics.
• Insolvency/solvency opinions: Transactions and dividend legality under solvency tests.
• Joint ventures: Contribution valuation, deadlock pricing, put/call triggers, and exit waterfalls.

8) What a TRW valuation engagement looks like

8.1 Scoping & independence

• Confirm purpose, audience, standard/premise of value, and independence (especially for fairness/solvency opinions).
• Define deliverables: model, report, board materials, court-ready exhibits.

8.2 Data & diligence

• Secure the data room: audited FS, management accounts, budgets, capex plans, contracts, customer cohorts, supply agreements, and HR/ESOP details.
• Conduct management interviews; align narratives with numbers.
• Triangulate with market evidence: comps, rates, and sector indicators.

8.3 Modelling & review

• Build a transparent model (clean tabs, version control, named ranges).
• Run scenario trees and sensitivity sweeps.
• Peer review inside TRW; if needed, coordinate with your auditor for pre-clearance.

8.4 Reporting & sign-off

• Produce a valuation report: scope, standards, methods, assumptions, calculations, and conclusion.
• Prepare board/committee decks and resolution wording for approvals.
• For contentious matters, prepare affidavit-ready material and cross-examination exhibits.

9) Bangladesh-specific pitfalls we help avoid

• Purpose drift: Using a financing valuation for a minority squeeze-out dispute—mismatch in level of value and discounts.
• Over-reliance on foreign comps: Missing local working-capital cycles, FX, or regulatory features; we blend global and Bangladesh evidence.
• Terminal value excess: Growth > long-term nominal trajectory or inconsistent with capex/returns math.
• Ignoring taxes/withholding: Overstating distributable cash and shareholder returns.
• Model opacity: Black-box spreadsheets that auditors and courts distrust; we keep models auditable.
• Documentation gaps: No record of assumptions, sources, or approvals—regulators and counterparties push back.

10) Valuation for boards: governance that protects decisions

• Minutes that matter: Record reliance on expert advice, scenarios considered, and reasons for selecting a pricing range.
• Conflict management: Related-party transactions and insider participation need clean recusals and independent review.
• Fairness & solvency opinions: When stake-holders or creditors rely on the decision, independent opinions de-risk the board.
• Disclosure discipline (listed issuers): Coordinate market disclosures with valuation-sensitive events; avoid selective leaks.

11) 60-Day TRW Valuation Sprint (typical)

Days 1–10: Define & gather
🟩 Scope and engagement letter; standards/premise of value.
🟩 Data room opens; interview schedule; auditor liaison.

Days 11–30: Model & evidence
🟩 Normalizations; base-case model; comps and rates book.
🟩 Draft valuation range; red-team review.

Days 31–45: Scenarios & sign-offs
🟩 Sensitivities; scenario cases (upside, downside, regulatory).
🟩 Draft report and board pack.

Days 46–60: Finalize & implement
🟩 Final report; board approvals; filings/documentation.
🟩 If transaction: align SPA mechanics (working-capital pegs, earn-outs, MAC, price-adjustment clauses) with the valuation logic.

12) Documentation you receive (and can publish internally)

• Valuation Report (court-ready narrative + technical appendices)
• Excel Model (clean tabs, labeled, scenario toggles)
• Comps & Rates Book (screens, filters, and rationales)
• Board/Committee Deck (decision memos, one-page summary, sensitivity charts)
• Minutes & Resolutions Pack (AGM/board wording, reliance clauses)
• Implementation Checklist (disclosures, filings, covenants alignment)

13) FAQs — fast answers for CEOs, CFOs, founders, and investors

Q1. Which method is “best” for Bangladesh?
No single method. We usually triangulate DCF with trading and transaction multiples, and sanity-check against NAV. Weighting depends on quality of forecasts, sector liquidity, and deal purpose.

Q2. Do we always apply a control premium or DLOM?
Only if the level of value requires it. A minority, non-marketable interest may justify DLOC/DLOM; a control valuation may capture strategic control benefits—facts and purpose drive the decision.

Q3. How often should we re-value?
At each material event: financings, acquisitions/divestments, ESOP grants, impairment triggers, year-end reporting, and covenant resets.

Q4. Can we use international comps if local peers are few?
Yes—with calibrated adjustments for growth, scale, margins, and risk; we also cross-check with local private transactions and macro constraints.

Q5. Do auditors accept management-prepared models?
They can—if assumptions are reasonable, evidence-backed, and the model is transparent. Independent review by TRW materially improves acceptance and reduces rework cycles.

Q6. What makes a valuation “court-proof”?
Proper standard/premise of value, transparent methods, reliable data, clear reasoning, and clean documentation—plus an expert who can explain and defend the conclusions.

14) Business Valuation — TRW Summary Table

Talk to TRW’s Valuation & Deals Team

Phones: +8801708000660 • +8801847220062 • +8801708080817
Emails: info@trfirm.com • info@trwbd.com • info@tahmidur.com
Global Law Firm Locations: Dhaka — House 410, Road 29, Mohakhali DOHS • Dubai — Rolex Building, L-12 Sheikh Zayed Road.

If you’d like, we can tailor this into a board-ready valuation pack for your sector—complete with the model, comps/rates book, and resolution wording—so you can approve and execute with confidence.