Trying to keep my audience awake amidst the splendour of the former home of the Manchester Ship Canal Company and now Gateley Legal during a super day with pro-manchester and Hardman & Co discussing the drivers behind the valuation of private assets. As a valuation geek I enjoyed comparing our data and theory with the real world experience of Charlotte Ashton of Implicit Advisory Limited and my pal Richard Angus. Some takeaways:
👮♂️ FCA review will only result in more scrutiny of private equity valuations, shining the spotlight on valuation processes, valuation committee governance, and information disclosure to fund boards
💷 Continuing to hold assets at cost year after year after year won't cut it
💹 Higher interest rates and impact on debt affordability has hit leverage in PE deals which has fed through to lower valuations (one of our customers told me they have just completed a classic PE deal where the sponsor has funded the whole capital stack from equity through to senior)
🤝 If you are trying to maximise value as a seller (who isn't) think hard about the growth story for the buyer ie the drivers of future value beyond the deal (as well as (of course) how to get to the point where your asset is attractive to that buyer)
✅ factors on the multiple include PIGS: Predictability, Industry, Growth, Size, however....
☁ a lot of it comes down to sentiment, which is driven by big macro factors and is, therefore, in the lap of the Gods......however, the earnings the multiple is attached to IS in your control so focus on this side of the equation as a business owner
Thank you Keith Hiscock and Larissa Adams for inviting me to speak and contribute to the panel discussion.
Great to be up there with some of our customers and to see others in the audience like Peter Black at Snowball Group and David Simmons at Azets.
#corporatefinance #mergersandacquisitions #privateequity #businessvaluation
Senior Managing Director at CBIZ Valuation Group
1moFun evening with an awesome team!!