In the last issue, we gave you some takeaways from the NACVA and the CTI’s 2020 Business Valuation and Financial Litigation Super Conference that was held online over five full days (June 15 to June 19). Of course, COVID-19 was a hot topic of discussion in a number of the sessions, so, in this issue, we present a few tips from the conference on dealing with the pandemic’s impact on business valuation.

• Jim Hitchner (Valuation Products and Services) was “shocked” by the CBO’s June 1 report saying that, as a result of the global pandemic, it will take 10 years before the country’s real gross domestic product (GDP) matches the office’s projections from January.
• Even with adjustments to cash flows for the extra risks of COVID-19, projections will still have less reliability than before, says Roger Grabowski (Duff & Phelps). Therefore, the discount rate will have to reflect some of the extra risks.
• You don’t have to stick with a five-year DCF. Consider a two- or three-year time frame as well as multiple scenarios and a mix of discount rates, advise several speakers.
• Not all companies are being negatively impacted by the pandemic, points out Mark Kucik (The Kucik Valuation Group LLC). But be careful and don’t assume that a spike in business will last—dig into what is really going on.
• As it did in the wake of the 2008 crisis, the IRS is on the lookout for pumped-up DLOMs without adequate support and explanation, reports former IRS manager Michael Gregory (Michael Gregory Consulting LLC).
• Clients are worried about survival and are less in need of full-blown valuation services, so consider offering help in that regard, such as zero-based budgeting and debt renegotiation, advises veteran practitioner Rod Burkert (Burkert Valuation Advisors LLC), who focuses on helping valuation firms with practice management.
• Although COVID-19 is grabbing all the headlines, it’s not the only major development that will have potential impacts on valuation, says Chris Hamilton (Arxis Financial Inc.). These include the Fed buying up corporate bonds, the upcoming elections, and low interest rates.

For more, see “25 Tips on Dealing With COVID-19 From the NACVA Conference” in the upcoming August 2020 issue of Business Valuation Update.