An interesting roundtable discussion on the 10 big issues in business valuation appears in the Fall 2019 issue of the journal of the Organismo Italiano di Valutazione, the valuation standards-setter in Italy. Listed as No. 1 of the 10 areas that have a profound influence on value is prospective financial information (PFI). “I believe that business valuers historically have not, on average, performed enough procedures to come to a conclusion that PFI is reasonable for use in their valuations,” says Tony Aaron
(USC Marshall—USA) in the article. Some of the procedures that are lacking stem from the analyst not applying enough professional skepticism to the PFI. “Professional skepticism is an attitude that includes a questioning mind and a critical assessment of the appropriateness and sufficiency of external and internal evidence,” points out Mauro Bini
(Bocconi University—Italy), who is editor-in-chief of the journal. Bini says that one of the attributes needed for professional skepticism is objectiveness. “This attribute refers to the perspective that the business valuer must adopt in analyzing specific facts and circumstances, weighing both corroborating evidence and contrary evidence,” he says. Also joining the discussion are Wolfgang Ballwieser
(University of Munich—Germany), Stefano Giuliani
(Caxton Europe—UK), and Eric Teo
(Nanyang Tech. Singapore University—Singapore). The group also discusses other areas, including the terminal value, various inputs to the discount rate, using public multiples for private companies, minority interests, price vs. value, and business models. The 50-page journal is available from BVR as part of its BVResearch Pro platform
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