By Bill Anderson, FCCA, Chief Executive Officer — Assetica, Dubai, UAE
Definition: IFRS valuation measures an asset, liability or equity interest at the value an IFRS standard requires, usually fair value under IFRS 13. Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In the UAE, IFRS valuation is most often needed for unquoted investments, acquisitions, earn-outs and share awards.
Assetica prepares IFRS valuations in the UAE for companies, family offices and holding groups that report under IFRS. We measure unquoted shareholdings, earn-outs, acquired businesses and share awards, and we document every input so your auditor can trace it. We are an independent firm in Barsha Heights, Dubai, with over 500 valuations completed across 15+ countries. We work to RICS, IVS and IFRS standards and are led by a former RBS Global CFO. We do not audit, broker deals or take success fees, so nothing rides on where the number lands. That matters, because a Level 3 fair value is a judgement. A judgement is only as credible as its evidence and the independence of whoever made it.
Most IFRS valuations are triggered by an event rather than a choice. Taking control of a business brings IFRS 3 into play: identifiable assets, liabilities and any contingent consideration are measured at fair value at the acquisition date, with limited exceptions. If you already held a stake before taking control, that earlier stake is remeasured at fair value. So is any interest you keep after losing control of a subsidiary. Holding unquoted shares without control, joint control or significant influence brings IFRS 9, which requires those equity investments at fair value at every reporting date. Goodwill brings an annual IAS 36 test, where recoverable amount may rest on fair value less costs of disposal. Granting shares or options to staff brings IFRS 2. Restructurings between entities under common control sit outside IFRS 3, so the group's accounting policy decides whether fair values are needed. For UAE family offices and holding companies, the recurring trigger is the year-end measurement of private holdings.
IFRS 13 asks one question: what would a market participant pay to buy this asset from you, or demand to take this liability off your hands, at the measurement date? That makes fair value an exit price. It reflects the assumptions market participants would use, not the owner's own plans or synergies only one buyer could unlock. The standard expects valuation techniques that use as much relevant observable data as possible and as little unobservable data as necessary. It then classifies the result by the lowest level of input that is significant to the whole measurement. Level 1 is an unadjusted quoted price for the identical asset in an active market. Level 2 uses other observable inputs. Level 3 relies on unobservable inputs, such as a private company's own forecast. Where the transaction price was fair value and a technique using unobservable inputs will be used later, it must be calibrated to return that price at initial recognition.
The method follows the asset and the evidence. A recent arm's length transaction in the investee's own shares is often the best starting point, adjusted for time elapsed, trading since and any difference in rights. Where the business has a forecast a buyer would rely on, a discounted cash flow captures it. The discount rate is built for that business, not borrowed from the group. Trading multiples from listed peers and prices from precedent transactions test both. Holding companies are usually valued on a sum-of-the-parts basis. Each underlying interest is measured on its own terms, then holding-level debt and other liabilities are deducted. Where share classes carry different rights, such as liquidation preferences, value is allocated with a probability-weighted or option-based model. Earn-outs are valued by modelling the outcomes in which they pay, then discounting for time, the risk in the target metric and the payer's own credit risk. Simulation is used where the payout formula is not linear.
These standards overlap, and auditors check that the numbers agree. A purchase price allocation under IFRS 3 measures acquired assets and liabilities at fair value, including intangibles such as customer relationships, brands and technology. The forecasts behind the allocation, the contingent consideration and the first goodwill impairment test should be consistent, or the differences explained. Later changes in the fair value of liability-classified contingent consideration go to profit or loss, unless they are measurement period adjustments. Earn-out payments that are automatically forfeited if the seller leaves employment are remuneration for post-combination services, not consideration. Under IAS 36, recoverable amount is the higher of fair value less costs of disposal, an IFRS 13 measurement, and value in use, which is not. Share-based payments sit outside IFRS 13 altogether, because IFRS 2 has its own fair value basis. Equity-settled awards are measured at grant date, and an unquoted company still needs a supportable value for the underlying shares.
Under ISA 500, auditors evaluate the competence, capabilities and objectivity of any expert management uses, in proportion to how significant that work is. ISA 540 (Revised) then has them look at how the estimate was made, how uncertain it is and whether there are signs of management bias. A report built for that review states the standard, the unit of account, the measurement date and the hierarchy level, with reasons. It explains why each method was chosen and how the results were reconciled. Every significant input has a dated source. Unobservable inputs come with ranges and a sensitivity table, which support the Level 3 disclosures IFRS 13 requires. Last year's estimate is compared with what actually happened, because auditors review prior estimates too. We provide the working model alongside the report and walk your audit team through it. The auditor still forms its own view, but a report built this way answers the questions an audit team predictably asks.
The classic error is an unquoted stake held at cost for years, long after the investee's performance or funding has moved. A recent funding round is evidence, not an answer: preferred rights, the time elapsed and trading since all need adjusting for. Owner-specific plans and synergies leak into what should be a market participant view. Some reports apply a discount simply because the holding is large, which IFRS 13 does not allow. Discounts for lack of control or marketability must be consistent with the unit of account and supported by what market participants would actually do. Earn-outs are booked at the maximum or at nil, then never remeasured. Hindsight creeps in when a fall caused by events after the year end is pulled back into the year-end value. Finally, disclosures stay generic, with no quantified unobservable inputs and no sensitivity, which is where audit comments often land.
Family offices and holding groups often hold private stakes through layers of mainland, free zone, DIFC or ADGM vehicles. The valuation looks through each layer to the operating business, then measures the instrument actually held, whether ordinary shares, preferred shares or a shareholder loan. Whether a vehicle is an investment entity under IFRS 10, which fair values its subsidiaries rather than consolidating them, is a judgement to agree with your auditor first. Corporate tax raises the stakes. Under Ministerial Decision No. 114 of 2023, a taxable person with revenue above AED 50 million must prepare full IFRS financial statements for corporate tax. Taxable persons above that threshold, and Qualifying Free Zone Persons, must also keep audited financial statements. Tax at 9% on taxable income above AED 375,000, under Federal Decree-Law No. 47 of 2022, starts from accounting profit. Unrealised fair value movements can therefore reach the tax computation. Whether to make the realisation basis election, and whether any exemption applies, is for your tax adviser.
Scoping Call: We confirm the standard, the interests to be measured, the measurement date and your audit timetable, then fix the fee in writing.
Rights and Data Review: We collect accounts, forecasts, shareholder agreements and deal documents, and record each instrument's rights, because preferences and earn-out terms change value.
Measurement and Testing: We apply the methods that suit each asset, calibrate to recent transaction prices, and test sensitivity to every significant unobservable input.
Report and Audit Support: You receive the report, working model, hierarchy reasoning and draft disclosure inputs, and we walk your audit team through the evidence.
What is a Level 3 fair value measurement?
A Level 3 measurement is a fair value that depends on at least one significant unobservable input, such as a private company's forecast or a discount rate built for it. Most unquoted UAE shareholdings fall into Level 3. Because nobody can check those inputs against a market price, IFRS 13 requires more disclosure. That means disclosing the significant unobservable inputs, a reconciliation of movements in the period and how sensitive the value is to them.
Can unquoted equity investments be held at cost under IFRS 9?
Only in limited circumstances. IFRS 9 requires every investment in equity instruments within its scope to be measured at fair value, quoted or not. Cost may be an appropriate estimate where too little recent information exists, or where cost is the best estimate within a wide range of outcomes. That argument weakens with time. Changes in the investee's performance, market, management or funding are all signs that cost may no longer reflect fair value.
How is contingent consideration measured under IFRS 3?
Contingent consideration is measured at fair value at the acquisition date and included in the consideration transferred. If it is classified as an asset or a liability, later changes in fair value go to profit or loss, unless they are measurement period adjustments. If it is classified as equity, it is not remeasured. Payments that are automatically forfeited if the seller's employment ends are not consideration at all. They are remuneration for post-combination services.
Do auditors require an independent valuation report?
IFRS does not require one, but a material Level 3 balance is often hard to support without it. Under ISA 500, auditors evaluate the competence, capabilities and objectivity of any expert management uses. A valuer independent of the company, the deal and the audit firm makes that part of the review simpler. Independence does not settle the question: the auditor will still test the method, the inputs and the disclosures.
What is the difference between fair value and value in use?
Fair value is an exit price between market participants, while value in use is the present value of cash flows the entity expects from the asset in its current condition. IAS 36 sets recoverable amount as the higher of fair value less costs of disposal and value in use. Value in use excludes uncommitted restructuring and future enhancements, uses a pre-tax discount rate and is not an IFRS 13 measurement. Mixing the two bases in one model invites audit challenge.
Does IFRS 13 apply to share-based payments under IFRS 2?
No. Share-based payment transactions within the scope of IFRS 2 are outside IFRS 13, and IFRS 2 has its own fair value basis. Equity-settled awards are measured at grant date and not remeasured, while cash-settled awards are remeasured at each reporting date. Market conditions are built into the fair value of the award. Service and non-market performance conditions instead affect how many awards are expected to vest. Unquoted companies still need a supportable value for the underlying shares.
How much does an IFRS valuation cost in Dubai?
The fee depends on what is being measured, and Assetica fixes it in writing after a short scoping call, before any work starts. We do not publish a price list. The main drivers are the number of holdings, the complexity of share rights or earn-out terms, the quality of the forecasts and whether a prior-year model can be rolled forward. There is no hourly billing.
How long does an IFRS valuation take?
Timing is confirmed at the scoping call, and it is usually driven by how quickly the data arrives. Shareholder agreements, forecasts, transaction documents and prior-year models are the common bottlenecks. The practical step is to start before the year end. Fix the measurement date, agree the approach with your auditor early, and leave room in the audit timetable for questions.