Valuation and Damage Quantification: Do the Same Principles Apply in the COVID-19 Era?

The pandemic has had a significant impact on the global economy and financial markets, with increased volatility and business disruption worldwide. It has affected businesses in many different ways, some favourably, but the majority adversely. As a result, dispute activity is anticipated to increase from this heightened market volatility and the large impact it had on countless industries and geographical regions.

This article considers some of the economic consequences of the pandemic, the type of disputes that may arise, how the valuation date relative to the stage of the pandemic may affect the assessment of forecast future cash flows, and the challenges business valuators may encounter when performing business valuations and quantifying economic loss in times of such uncertainty.

The following is an extract from Global Arbitration Review, published on August 12th 2021. The entire publication can be read here: https://globalarbitrationreview.com/review/the-arbitration-review-of-the-americas/2022/article/valuation-and-damage-quantification-do-the-same-principles-apply-in-the-covid-19-era

"The covid-19 pandemic affected virtually every business around the globe in many aspects, including customer demand, supply chain, operational restrictions, commodity price shocks and mac-roeconomic policies. Although the pandemic has created new challenges for valuing assets and businesses, practitioners may find that the key to answering difficult questions still lies within the fundamental principles of valuation.

This article offers a summary of the economic consequences of the pandemic, observations on disputes that may be likely to flow from events related to the pandemic and ideas on the applica-tion of principles of valuation in assessing economic loss."

Reproduced with permission from Law Business Research Ltd