BusinessCompany NewsUK200Group launches rival index to challenge BDO

UK200Group launches rival index to challenge BDO

Competing company valuation index launched as M&A market shows signs of recovery

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
acquisitions.

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
index.

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
recovery.

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
period.

Blake said he was seeing more companies looking to take a stake in other
businesses.

“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.”

Related Articles

BDO replaces Deloitte as Mitie auditor

Audit BDO replaces Deloitte as Mitie auditor

3m Emma Smith, Managing Editor
BDO on ‘recruitment spree’ with multiple partner appointments

Accounting Firms BDO on ‘recruitment spree’ with multiple partner appointments

10m Emma Smith, Managing Editor
BDO set to recruit 350 trainees

Accounting Firms BDO set to recruit 350 trainees

11m Accountancy Age editorial
New managing director at BDO in Birmingham

Accounting Firms New managing director at BDO in Birmingham

11m Stephanie Wix, Writer
BDO appoints CIO from Olswang

Accounting Firms BDO appoints CIO from Olswang

11m Stephanie Wix, Writer
BDO global revenues rise 8% to hit £6bn

Accounting Firms BDO global revenues rise 8% to hit £6bn

1y Stephanie Wix, Writer
BDO appoints audit and restructuring partners

Accounting Firms BDO appoints audit and restructuring partners

1y Stephanie Wix, Writer
BDO pinches KPMG leader for new legal role

Accounting Firms BDO pinches KPMG leader for new legal role

1y Fraser Simpson, Reporter