Allocation of a group’s value amongst its subsidiaries, taking into account their respective roles

SORGEM Evaluation was commissioned to provide its opinion on the relative value of two entities within the same group specialising in medical equipment. To this end, we adopted an approach based on value allocation according to the respective importance of each entity in value creation, estimated using the allocation matrix developed in line with the OECD’s transfer pricing guidelines. This method takes into account the role of the various assets (particularly intangible assets) in achieving the key success factors in the market. We also corroborated the results of our initial analysis with a study of market valuations of companies whose core business is relatively comparable to that of each of the subsidiaries covered by the valuation.