Expert views on private business valuation & the financial crisis

BVWireIssue #75-1
December 3, 2008

Robert T. Slee, CBA, of Robertson & Foley, will keynote the Russian Society of Appraisers annual Congress in Moscow on December 10. The topic: The impact of the current financial crisis on private business valuation. We caught up with Slee and got an exclusive overview of his five most important takeaways for all BV experts:

  1. Worldwide access to private capital is severely constricted, and will continue to be restricted for the next few years, causing lower business values.
  2. More limited access to private capital is dramatically increasing private cost of capital for many companies. In effect, if private companies want capital, they are going to pay much more to get it.
  3. The worldwide banking system is stressed and will continue to feel stress for the next few years. All of the asset-class meltdowns (mortgage; credit cards; consumer/commercial borrowing; private equity; hedge funds; and credit default swaps) are aimed directly at the banks.
  4. Constricted private capital, plus a fallen worldwide demand curve, is causing a worldwide fall in acquisition pricing and the ability to get acquisitions completed. This will continue for 3-5 years.
  5. A lack of worldwide spending will cause dramatically lower profits for both large and small companies the next few years. Slee predicts that pricing for both public and private markets will likely fall.
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