IDW publishes Technical guidance on the impact of Russia’s war on Ukraine on business valuations

On March 23, 2022 the Expert Committee on Business Valuation and Economics (FAUB) of the IDW published a Technical guidance on the effects of Russia’s war against Ukraine on business valuations.

The subject of the guidance is the reference date principle and the effects of the war on the determination of future financial surpluses as well as the determination of the cost of capital.

Against the background of the long-term orientation of the future earnings value methods according to IDW S 1 in the version of 2008, an increase of the risk premium in the context of the determination of the cost of capital is currently not intended. Instead, the increased uncertainty as a result of the Ukraine war is to be taken into account in the planning. The development of the return on risk-free interest rates as well as the implications for the base interest rate, borrowing costs and growth discount are nevertheless to be monitored.

The technical note is available here on the IDW website (only in German).