The full extent of the economic and business disruptions, duration of the crisis, time to recover, shape of recovery and possibility of a second wave of Covid-19 infections are still unknown. Valuation specialists should carefully assess and evaluate the inputs to valuations and adjust accordingly to incorporate current market conditions. Before valuation, a valuation professional should first assess if the business would be valued under a going concern assumption, or distressed or liquidation situation. Trailing 12 months (TTM) multiples will appear low, as stock prices are down (numerator) and historical financial metrics do not yet reflect current business disruptions (higher denominator). In an environment of heightened uncertainty that inherently increases risk, market participants become risk-averse and require higher return rates.

Source: Manila Times June 09, 2020 18:56 UTC