Business valuation in CV 19 world

by a searcher from The University of Chicago - Booth School of Business

4 years ago

Hi all, hope everything is safe with you.
I am doing a self-funded search in Australia. Quite curious to hear from this network on how to value a lead in CV19 times - what techniques you are planning to apply or should apply to come up with a better valuation. My view is that given most of the short-term demand and some of the near long-term demand (3-5 years) will be permanently distorted, we can't accurately predict revenues and hence DCF valuation might not paint an accurate picture. We can't use multiples either since there is no precedent of such a significant event and how companies behaved in those events.
Meanwhile, if anyone is interested to learn more about Australian market, happy to have an offline chat.
Look fwd to hear your views.

6 likes
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9 comments

searcher from IESE Business School

Given that the future is largely unchartered territory, my view is that to align buyers and sellers interests, a deal would have a relatively low upfront and a sizeable earn-out.

3 years ago | like reply | 0 likes

professional

This whole situation is uncharted waters at the moment. Standard valuations just cannot logically apply in the near term. My view is that it presents the opportunity to work with the current business owners to see if their needs can be met without taking on undue risk. In other words think outside the square to figure out how they can be 'worked out ' of their businesses. Given the current uncertainty I guarantee they will be 'all ears'.

3 years ago | like reply | 1 like

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