Australia

Details

  • Service: Advisory, Transactions & Restructuring, Corporate Finance, Restructuring Services, Transaction Services
  • Industry: Financial Services, Private Equity
  • Type: Survey report
  • Date: 4/04/2013

Valuation Practices Survey

Our annual survey provides insight into the methodologies adopted by Australian financial analysts and corporate financiers and how they are applied.

Valuation Practices Survey 2013 

The volatile economic environment is making assessments and assumptions around valuations very challenging. A recently low government bond yield creates even more challenges in the application of valuation methodologies.
Valuation Practices Survey 2013 cover
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The challenging environment means that forecasting future growth and returns is particularly problematic. The domino effect of this uncertainty is a much more complex process for estimating the impact on the cost of capital.

 

Textbook principles and processes are being stretched – given the uncertain prospects in most sectors, it is more difficult than ever to prepare financial forecasts.

 

Our survey provides a unique reference point for corporate financiers, infrastructure funds and consultants performing valuations in the Australian market.

 

Key themes

  • Cash is still king – The discounted cash flow approach is the dominant methodology used by Australian financial analysts and corporate financiers. This may reflect the more flexible nature of this approach, which enables multiple scenarios around growth expectations to be considered, providing a far more insightful valuation result.
  • Lack of reaction to volatility – 68 percent of participants indicated that they do not revise their equity market risk premium assumptions to reflect the recent developments in capital markets.
  • Advisers take note of accounting standards – 21 percent of the participants critically evaluate and 74 percent consider the impact of accounting standards on future financial statements when advising on a deal.
 

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