BDO’s position as the authoritative source of company valuations is under
challenge just as the industry prepares for a predicted spike in mergers and
The UK200Group, which represents 110 firms including mid-tier accountancy
practices, has put together a rival company valuation index that it claims is
better suited to measuring the value of small and medium sized businesses.
The new index threatens BDO’s mainstream Private Company Price Index
described on the firm’s website as “the most authoritative source on private
company values by practitioners”.
Christopher Clark, corporate finance partner at BDO, said his index catered
for big and small businesses.
“It is designed to track all sizes of business,” he said.
Clark added that the Private Company Price Index had been running for 15
years and was based on publicly available financial information on deals
completed in the quarter.
BDO’s index is used as a guide for companies looking to purchase another
business. It is also used by government departments in need of independent
company valuations and in court disputes.
The UK200Group found over time that the valuations arrived at by BDO failed
to match with their on-the-ground experience of mergers and acquisitions among
smaller businesses. In response last year, the group decided to make their own
Simon Blake, corporate finance partner at Price Bailey and chairman of the
corporate finance panel at the UK200Group, said the BDO assessments arrived at
higher valuations which were at odds with their practical experience.
“Our index is based on actual transactions. We asked our member firms in the
UK to simply give us transactional data on deals they have advised on with
companies that have been bought or sold in the last few years,” he said.
The new index comes at a time when M&A market is showing signs of
A Deloitte CFO survey found 92% of CFOs think merger activity will rise over
the next year, with 39% contemplating making corporate acquisitions during that
Blake said he was seeing more companies looking to take a stake in other
“Since the summer we are seeing lots of acquisition opportunity and we are
also seeing, unsurprisingly people looking for equity investment,” he said.
“Very few people are trying to raise bank debt in our view and that is a
reflection of a lack of trust in the banking sector over borrowing in the past.”
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