Business Valuations Post COVID-19, The Impact of Fear, Uncertainty and an Economic Downturn

May 11, 2020

by an investor from Curtin University - Curtin Business School in Perth WA, Australia

Searchers in Australia – past, present and future have been talking about the impact of Covid19 on Australian Business Valuations.

Our conversations with the community have prompted us at Second Squared to publish our thoughts in a 5-Post series that starts today.

Installment 1: Business Valuations Post COVID-19, The Impact of Fear, Uncertainty and an Economic Downturn

Reply by a searcher
from University of California, Berkeley in San Francisco, CA, USA

Certainty is a premium. Uncertainty is a discount. Better supply of capital = higher multiple. Tighter supply of capital - lower multiple. Industry dynamics specific to each. Cycle dependent = post Covid. All other major factors are relatively unchanged pre or post C19. Important to look at the long tail on industry no matter part of cycle.

Reply by an investor
from Curtin University in Perth WA, Australia

Thanks George, true if the business is an industry that is heavily impacted by the economic cycle a recession could result in lower multiples (the multiple reflecting lower growth future growth). But is that always the case? Possibly only time will tell and it may be different in different regions..

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