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Valuing a Business in Volatile Markets
By: James Horvath, MBA, CPA, CA, FCBV, ASA, CFE
ISBN/ISSN/Product Number: 978-0-7798-2286-7
Product Type: Book
Number of Pages: 848 pages
Number of Volumes: 1 volume bound
Binding: hardcover
Publication Date: 2010-06-04
Publisher: Carswell
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Description

Editor: James Horvath

Valuing a Business in Volatile Markets is written and compiled to enable business valuators, and others whose business activities touch on business valuation (for instance CFOs, corporate lawyers, accountants, and even sophisticated business owners) to understand how the principles of business valuation are impacted by difficult economic times. This new book provides an excellent overview of the valuation principles and methodologies in chapter one and a more thorough treatment of topics in subsequent chapters. In this regard it is an excellent desktop reference for a reminder/primer on subject areas as well as a good reference for someone wishing to deepen his/her knowledge of valuation issues generally and in the context of economic recession. While the basic principles of business valuation do not change, the economic environment raises new valuation issues and requires the application of valuation principles and methodologies in different ways, or in ways that are informed by a different economic climate. It also provides an international perspective on the topic as well as addressing new and emerging developments such as the impact of the move from financial reporting under Canadian and US GAAP (Generally Accepted Accounting Practices) to IFRS (International Financial Reporting Standards). (Canadian publicly traded companies move to IFRS in 2011) Factors to consider in volatile markets include:

  • Information may be less reliable - As a result, market views of value between buyer and seller may be more divergent. Values of assets such as investment and pension funds may swing wildly.
  • Capital funding is constrained - Investors may seek a higher rate of return (to offset higher risk) and higher anxiety levels may occur due to greater uncertainty of the future of the economy.
  • A greater portion of a company's value may derive from those things that make the business "sticky" with customers - for instance, customer relationships, and intellectual property.
  • The value of a business and its price, as well as the inputs going into the determination of each, may be much more divergent during difficult times, in part because a vendor may be distressed or because the cost of capital is higher and involves greater risk-taking.
  • As a valuator, you may also have to forecast more risk into your work than during stable economic periods.

Table of Contents • Introduction • Valuation Challenges in Volatile Markets • Valuation • Conventional Valuation Methodologies in Unconventional Markets • The Use of the Market Approach to Valuation in Volatile Markets • Valuation of Intellectual Property in a Distressed Economy • Finding the Trail: The Valuation of Technology • Equity Risk Premium & Volatility - Perspectives from the European Market • Valuation During Periods of High Volatility • Valuation Issues under IFRS • Valuing Distressed Companies • Critical Changes in the Playing Field Affecting Valuations • Derivation of the Cost of Capital Derivation in Central & Eastern Europe [CEE] • Valuation Issues during Argentina's 2002 Financial Crisis • Business Valuation: Practices & Challenges in China • Valuing an Idea & the Ability to Create Value • Appraisal in Delaware - Recent Cases and Considerations • Present Value of the Lost Tax Shield • Transfer Pricing in Times of Volatility • Migrating Intangibles in Troubled Economic Times • Transfer Pricing & Valuations in Asia • Business Valuation Experts on Trial - A Canadian Perspective • The IVSC: The Challenge of Developing Global Valuation Standards • Tips, Thoughts & Observations • The Valuation of Infrastructure Assets in Volatile Markets • Valuing Real Estate in an Unstable Market • Valuing Machinery & Equipment in a Depressed Manufacturing Market • Valuation Insights • Exit Strategies in Volatile Markets • New Realities Across Formal & Informal Restructuring • Government Policy & Investment in Times of Uncertainty • Fraud Detection in an Increasingly Complex World • Business Valuation Questionnaire

About the Author
Jim Horvath, Managing Director of ValuQuest Limited, has specialized in business and securities valuations and related intellectual property for more than 35 years. Having completed over 3,000 valuation assignments, including the supervision of large, complex multidiscipline valuation engagements, he has worked in a wide variety of industries and given expert testimony on valuation matters on multiple engagements. Jim also has extensive international experience, having worked on valuations, mergers, and acquisitions in over 60 countries. He has authored several books and numerous articles on valuation, and both in Canada and internationally is a frequent speaker on valuation methods and issues. Currently Managing Director of ValuQuest Limited, Jim was previously Partner with Deloitte & Touche, from 1988 to May 2009, engaged in Business Valuations.
CPD