Business valuation in the current crisis

The current Covid-19 crisis will make it difficult to value companies, for all investors and particularly for investment funds when publishing their Net Asset Value. The possibility of nationalisation raised by the government would also give rise to specific valuation issues for the companies concerned, since in such a case, the shareholders of the targeted companies would be entitled to fair compensation, which would have to be determined by an independent third party. This crisis will force valuers to review how certain valuation methods are applied and compel them to analyse the likely impact of the crisis by sector and by company. All this is taking place against a backdrop where some market participants consider share prices to be unrepresentative of fair value, due in particular to behavioural biases affecting the markets and forced sales…

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