Valuation Considerations During Times of Financial Uncertainty

Valuation Considerations During Times of Financial Uncertainty by Andy Manchir an ESOP Advisor.

As the country focuses its attention on COVID-19, and with most of the nation under strict “stay-at-home” orders allowing only essential businesses to operate, many private companies in a variety of industries are suffering the economic impact of the current public health crisis.

Valuation Summary

Although it may be difficult to determine the short- and long-term impact on the value of a private business, one fact will not change – company value will still be determined using these three commonly accepted valuation approaches:

Income approaches rely on earnings or cash flow generated by a company
Market approaches rely on public stock market data and transaction data
Asset approaches rely on values of the underlying assets of the company