A founder once asked me something that sounds simple, but isn’t. “We just closed a deal at ₹100 crore, then why is the tax valuation coming at ₹70 crore?” It is the same company with the same financials and the same timing.
So what changed? Nothing, except the lens.
When you’re doing an M&A valuation, the conversation sounds like this: “What can this business become?” “What synergies can we unlock?” “What premium are we willing to pay for control?”
It’s forward-looking, a little optimistic, sometimes even strategic.
But when you shift to a tax valuation, the tone changes completely: “What is the defensible fair value today?” “What will stand scrutiny?” “What assumptions can we justify line by line?”
It’s conservative, structured and far less forgiving.
And that’s how you end up with a deal value that reflects potential and a tax value that reflects defensibility.
The problem isn’t the difference. The problem is when no one is prepared to explain it.
Because that gap is exactly where questions start, scrutiny increases and sometimes, litigation follows.
The smartest teams don’t try to force both numbers to match. They do something far more important: They build a clear bridge between the two.
Because valuation isn’t about finding one correct number. It’s about answering one simple question: “Why is this number right, for this purpose?”
And if you can explain that well, the difference stops being a risk and becomes completely defensible.
