Round table: “Business valuation for making management decisions under current economic conditions”

We are pleased to inform you that on 19 March 2009 a round table discussion titled “Business valuation for making management decisions under current economic conditions” was organized and moderated by Deloitte Consumer Industrial Products Group.

Practical aspects of business valuation generated a keen interest among the leaders of 14 largest Ukrainian enterprises. Among the participants there were executives of such companies as “Dniproshyna”, “Asnova Holding”, “Centravis”, “Ukragroinvest”, IFG "TAS", and others. The participants were involved in heated discussions of practical aspects of business valuation and shared their experience with regard to this matter. Among the most exciting topics discussed, the participants were especially interested in calculating discount rate, forecasting enterprises’ operations, as well as factors affecting impairment of business.

Artur Ohadzhanyan, a Partner and the leader of Valuation Practice in Deloitte Ukraine, told about changes in approach to business valuation in crisis environment and explained the factors affecting impairment of business today. According to him, it is important to remember that while previously macroeconomic analysis in business valuation performed by many appraisers used to be quite formal, today it is becoming a key aspect of valuation. “It is vital today that the relevant approach should be used to valuate a certain business”, says Mr. Ohadzhanyan. In his opinion, income approach is most relevant in most cases; however, property approach could also be applied in certain situations.

Taras Trokhymenko, a Manager in our Valuation Department states that, “The company sales market and the stock market are not active. There are some facts of sales of enterprises that are scattered in time and pretty diverse in terms of the amounts involved, which are not always comparable to the valuated company. Therefore, it is nearly impossible to determine the market value of the valuated company based on the comparable data”.
Urfan Guliyev, an Investment Director of ”Asnova Holding” noted that today the value of assets was pretty volatile and affected by numerous factors. “Based on my Company’s experience, I’d like to point out that today the business valuation is primarily based on the market’s mood and expectations. Yesterday, the expectations were different and the value of assets was absolutely different from those we witness today. Another 6 months of expectations can change to the opposite, and valuation results will be even more different. In situation like this, everything depends on the real money offered by an investor”, he said.

The event was of tremendous interest and generated positive feedback from the participants. Based on the round table results, nearly all the participants said that they would recommend it to their colleagues. Taking into consideration the interest on the part of representatives of consumer and industrial companies, we are planning to arrange more similar events in the near future.  

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