Writing in the middle of a storm
April 9, 2025
The Liberation Day impacts continue to play out, but will other emerging MAGA strategies have even greater impacts on private company valuations?
Bloody (red) routs in the market – coined because of the colour a trading screen goes when all stocks are falling – are fascinating to observe. Four days in a row and commentators can happily fill pages of newspapers and screens of web pages with thoughts and opinions.
I had hoped that things would settle down around the impact of Liberation Day and I would be able write a sage piece on the likely direction of travel in terms of impact on private company and share valuations. That is not going to be possible. The fallout is still unfolding.
Suffice to say, volatility in public markets is rarely helpful to private markets. Ultimately, somewhere, a private company valuation ties into listed share prices (whether it’s use of comparable quoted data, comparable M&A, WACCs or accompanying discount rates). If the world economy shrinks because of the Liberation Day tariffs, this cannot be ignored in private company valuations.
Of course there may be pockets of uplift. Actually making America great again could lead to an uplift in the valuation of US domiciled assets. Companies who already have (or are rapidly establishing) a US subsidiary to sell into what remains the world’s largest market could buck the trend.
I noticed an interesting article in the Times this morning about H-1B visas. Apparently 15% of Meta’s US workforce hold H-1B visas compared with 0.5% of the overall workforce.
A tightening in the volumes of these visas being made available to expats could send top talent elsewhere in the world. So we could see a surge in talent working to grow the value of businesses outside the US, with an accompanying uplift in their valuations.
In the information age, where what those do at the top can be seen in real time, we also see the painful consequences for the wealth of others. The Musk-Tesla story will become a tail of legend, I suspect, on how business people sailing close to the (orange) sun of politics can see equity value of a business and personal wealth collapse. This, I might argue, is a counter narrative to the European narrative of politics being actively used to build value in business (through juicy government contracts).
As valuers we cannot look just for the obvious, nor assume that the headline is relevant to the valuation case. It’s all about the evidence specific to the case in hand. Can we PROVE the valuation is what it is not just CLAIM it is?
Just yesterday, we were asked to carry out a valuation by close of play today. We don’t do lite jobs just because the deadline is tight. So we have put eight of the team onto the job so we can put at least 48 hours of time into getting a full report finished by 5pm. It’s an interesting case as it is reviewing and commenting on a previous report as well as preparing our own historical valuation to see if we would have come to the same conclusions were it to have been prepared on our watch at the time.
Luckily, as it’s a historical valuation, one issue we don’t have to consider are the Liberation Day tariffs!
We can ALWAYS help you and your clients with a valuation need. The team has the time and resources and we believe passionately in creating reliable, evidence-based valuation reports which stand up to scrutiny.
