Highlights of the 7 July issue:
  • New BVU article notes increased use of discounted cash flow in UK business valuations
  • BVR/FactSet Control Premium Study updated for first quarter
  • More concern about the validity of the size premium factor
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Follow the business valuation profession in the United Kingdom and its expanding role in regulatory, fiscal, contentious, and compliance valuations with BVWire–UK. Twice a month, BVWIre–UK delivers news and perspectives from valuation thought leaders, expert practitioners, academics, the High Courts, HMRC, the standard setters, and more. We’ll also keep you current on new business valuation research, methodologies, data tools, and training opportunities from ICAEW, RICS, BVR, and others. Contact us with news items and/or suggestions.

New BVU article notes increased use of discounted cash flow in UK business valuations

‘There had been a consistent thread running through UK Court decisions of a preference for broad professional judgement over mathematical precision,’ says Andrew Strickland (FCA) in his new analysis, which appears in the July issue of Business Valuation Update.

BVR/FactSet Control Premium Study updated for first quarter

The 1Q 2020 Control Premium Study report is now available, and we have updated the online FactSet Mergerstat/BVR Control Premium Study platform to include the latest analyses.

More concern about the validity of the size premium factor

Most business valuers consider a size premium when calculating cost of capital for financial reporting purposes.

How would a wealth tax impact business valuation?

The FT ran a long interview with Gus O’Donnell last week, saying that ‘a UK wealth tax is more likely than ever because of the reordering of politics caused by the coronavirus pandemic.’

What do auditors expect from business valuation forecasts during COVID-19?

Auditors around the globe will be expecting multiple forecast scenarios in reports from their valuation experts.

Dates for your diary

10-13 July: ICVS-A Advanced Studies in Financial Instruments, virtual training ...

New business valuation resource from Professor Fernandez captures low market returns

Pablo Fernandez continues to release research that may assist UK business valuers working on reports with valuation dates in Q1 2020.

Third IVSC goodwill paper looks to step up ‘headroom’ alternatives to amortisation

The IVSC have published ‘Opportunities for Enhancing the Goodwill Impairment Framework,’ the third and final paper in its series looking at the IASB proposal to revert to goodwill amortisation.

How to value uncertainty whilst keeping your clients’ confidence

Chris Thorne tells BVWire—UK that ‘most valuer’s Inboxes at the moment are full of comment about the difficulties of undertaking valuations,’ but he’s still receiving requests for advice about ‘providing a suitable warning in their reports that their valuations are subject to material valuation uncertainty.’

Business valuation CPD diary

IVSC Annual General Meeting, 14-16 October, Chicago ...

Discounted cash flow projections during the crisis: tune in Thursday to BVR webinar

To keep DCF analyses trustworthy, are multiple scenarios now required?

New Epsilon Research, FactSet, and DealStats studies offer valuers first indications of the current trajectory in private-company values

Most valuers sense that small and medium-sized enterprises are less marketable, and less valuable, than they were at the beginning of the year.

Meanwhile, business analysts must be ever more cautious in their selection of listed company comparables

Choosing listed company comparables as a proxy for a small-business valuation has always required a leap of faith.

Easing on physical inspections begins while RICS (and others) promote data-driven property appraisals

BVWire—UK has been following the evolution of the property appraisal market as it switched to data-only valuations in response to COVID-19 (and mortgage lenders either stopped issuing new loans, or significantly reduced their maximum loan-to-value cap, effectively keeping most new buyers out of the market).

Refinitiv and S&P Global both enhance sustainability ‘ESG’

The two big financial data providers, Refinitiv and SPGI, released improvements to their methodologies to score listed company performance across social value themes including emissions, environmental product innovation, diversity and inclusion, human rights, and shareholder access.

The operating profit ‘free-for-all’ may end with new IASB presentation standards

Financial analysts often start DCF valuations with ‘operating profit’ as stated on the enterprise’s income statement and then adjust prior to deriving enterprise values.

Business valuation CPD diary (most events cancelled or postponed)

IVSC Annual General Meeting, 14-16 October, Chicago ...

Business valuation CPD diary (most events cancelled or postponed)

IVSC Annual General Meeting, 14-16 October, Chicago ...

Does business interruption insurance decrease company-specific risk?

Business valuers often ‘tic the box’ on property and casualty insurance policies as part of their management interviews.

Will COVID-19 open up the PIPES market in the UK? Baker MacKenzie say yes.

Private investments in public equities (PIPES) are a little-used financing alternative in the UK, but a new article by Baker MacKenzie London partners Nick Bryans and James Thompson in this month’s International Financial Law Review (IFLR) suggests that need may outweigh the huge cultural and regulatory hurdles.

Comment period on inventory valuation guidance open until 30 June

The International Valuation Standards Council (IVSC) has extended the comment period to 30 June for its IVS 230—Inventory Exposure Draft.

Fifty percent of high street retailers could fail by August, say Alvarez & Marsal

Business valuers have stood their corners against changes in valuation methods based on economic crises.

Business valuation CPD diary (most events cancelled or postponed)

IVSC Annual General Meeting, 14-16 October, Chicago ...

IVSC’s Darling describes how business valuation during COVID-19 differs from the 2008 financial crisis

The IVSC, in collaboration with RICS, released a new video looking at the impact of COVID-19 on global markets, geopolitics, and the global economy on 20 April.

In BVU article, Strickland suggests cost approach may be the ‘Cinderella’ of current crisis

The cost approach is normally accorded a lower status for going concerns, but Andrew Strickland advises valuers to think twice given the current crisis.

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