BVInt’s Approach: Our approach goes beyond traditional valuations in terms of risk assessment in order to be aligned with the highest standards of the private equity industry. Advanced Valuations with stochastic risk assessments based on macro economy, market, strategy, technology, operative and financial drivers (as shown in the figure below). Our approach goes beyond traditional valuations in terms of risk assessment. Macro economic, market and operative variables drive our advanced risk and valuation models  aimed at improving investment decisions. The DCF at risk methodology shows the flow of the business detailing the impact of each driver and the final value at risk: rNPV, & VaR based on NAV volatility.

BVInt’s Stochastic Model⁽¹⁾: Risk-value variables are subject to volatility driven by both history and strategic studies.

Systematic and Non-Systematic Risk: Not listed companies  are normally owed by entrepreneurs with an important position in the company and are not well diversified. Therefore, traditional valuation models are not enough to assess risk. The risk measurement of illiquid assets requires the use of traditional models complemented with the assessment of the volatilities and  probabilities of the business’ drivers. Using Risk Palisade (Monte Carlo Simulations), we are not only able to measure unsystematic or diversifiable risks but also non-diversifiable risks (systematic risk) involved in the business. In this way, we are able to show the probable flow of the business detailing the impact of each driver

Risk Mapping:

  1. Identify and assess all value and risk drivers including. External Drivers: Macro Economy and Market; Internal  Drivers: Strategy, Technology, Operative, Financials, etc,
  2. Build a “Cause & Effect” risk-value map flow

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Risk Flow and Value Drivers

Focus on Market and Strategic Risks and Value Drivers

In traditional valuation processes, risk assessment and attention has historically focused more than half its time on legal, compliance , and financial reporting functions. However, most big hits come from market, macro economic, strategic and operative risks.