Four questions you must always ask about PFI

BVWireIssue #225-3
June 23, 2021

valuation methods & approaches
case law analysis, control premium, factset mergerstat, management projections, valuation methods

There are many things to consider when evaluating prospective financial information (PFI), and much of it can be boiled down to four questions you should be asking, according to the just-released BVR Guide to Management Projections and Business Valuation: Analysis and Case Law:

  1. Does the forecast correspond to internal budgets (or external forecasts by stock analysts)?
  2. Is the current forecast consistent with previous forecasts?
  3. Do the assumptions in the forecast appear reasonable in relation to historical performance?
  4. Do the assumptions in the forecast appear reasonable in relation to performance of guideline companies or assets?

Of course, a lot of work is involved in answering these questions, and the guide can help. It is a collection of articles from BVR’s cache of “greatest hits” written by some of the top thought leaders in the profession that discuss a variety of elements, issues, and techniques practitioners should consider when utilizing management projections. Plus, the guide includes close to 100 digests that analyze court decisions involving projections and forecasts (the full court opinions are also available to buyers of the guide).

Note: You already have this new resource in your BV library if you are a subscriber to the Digital Library or BVResearch Pro.

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