Valuations in times of crisis

Key considerations and approaches for adjusting forecasts and scenarios

The Covid-19 pandemic reminds us of the difficulties inherent in factoring the impact of a crisis into asset valuation exercises. The value of an asset is closely linked to its ability and probability of generating future gains. However, in times of crisis, the future appears much more uncertain and the field of possibilities is therefore much wider. Similarly, common value approaches present their own set of difficulties.

Despite the crisis, not all valuations can be postponed until we have clarity around the end of the crisis. In fact, some of valuation exercises can have major knock-on effects.

In this report, we start by looking at the main principles to be observed, depending on the context of the valuation, and the very first actions and checks to perform. We then focus on detailed analysis of the market-based methods, notably multiple approaches. In doing so, the study will connect these methods with income approaches and will highlight a number of risks and pitfalls when implementing valuation processes in the context of a crisis.

Finally, throughout the study, a general approach will emerge aimed at interpreting market developments in the form of a configurable model of the effects of the crisis. This configurable model should increase understanding of the impairments of financial markets in times of crisis, while helping a business and its team learn if the model is a suitable course of action for them.

To read the full report, please download it below.

If you have any questions or would like to get in touch, please get in touch using the contact details to the right.

We hope you find this report useful and we look forward to hearing from you.

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Financial advisory: Dealing with COVID-19

The Covid-19 pandemic is causing uncertainty and disruption around the world. Our priority at Mazars is to protect people and ensure business continuity and high quality services for our clients, all while working as one partnership, supporting each other across the globe.

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Crisis valuations: interview

To mark the launch of ‘Valuations in times of crisis: how to increase visibility on multiples, forecasts and scenarios ’ we spoke to Laurent Inard, the Mazars’ partner behind the report to find out how modelling can help a business regain visibility over the markets and why it’s important to introduce magnitude and duration into the crisis equation.