The organic food industry is steadily growing and is becoming increasingly important in the food market. The March issue of the I-ADVISE Spotlight “ORGANIC FOOD – STRONG GROWTH OF A HEALTHY MARKET” gives an overview of the strongly growing organic food market in Germany and takes a look into its future. We report on the structural changes in distribution channels, highlight key trends in the organic food sector and conclude with M&A activities of financial and strategic investors.
Düsseldorf, March 13, 2019: The fifth edition of the study on German valuation practice in squeeze-outs, mergers and other legal measures according to German law has been complemented by reports with valuation dates in 2018 and analyses the development of valuation practice since 2010.
The new I-ADVISE study can serve as a reference point for the most important parameters of valuations and offers an overview of solutions to a multitude of valuation questions by valuation professionals. “The new tendency to derive the terminal value from average margin estimates or long term projections by the valuator has a high potential value impact.”, explains Dr. Jochen Beumer, Head of Valuation Services of I-ADVISE AG.
Düsseldorf, March 14, 2018: The fourth edition of the study on German valuation practice in squeeze-outs, mergers and other legal measures according to German law has been complemented by reports with valuation dates in 2017 and analyses the development of valuation practice since 2010. For the first time this study is also available in English.
„The new I-ADVISE study can be serve as a reference point for the most important parameters of valuations and offers an overview of solutions to a multitude of valuation questions by valuation professionals.“, explains Dr. Jochen Beumer, Head of Valuation Services of I-ADVISE AG.
I-ADVISE is an accounting and advisory firm specialised in transaction and valuation services and is a member of an international alliance of independent advisory firms.
Investors are comfortable with lower market risk premium
Study: Rising enterprise values are caused by declining excess return of shares as compared to securities
Since the last six month of 2012 to first quarter 2014 investors anticipate virtually a continuous decreasing market risk premium for investing in DAX-listed companies. At the end of second quarter 2014 it totals 5.9 % (weighted average) and is therefore 70 basis points below average during the period 2008 to 2013/14. This is the finding of an I-ADVISE research study which determines the implicit market risk premium for selected European and US-markets. The research supports the assumption that the present valuation level at the share market is not only due to low interest rates but also reflects a declining market risk premium requested by market participants.
The market risk premium is the anticipated excess return requested from investors for investing in shares as compared to risk-free securities. Therefore it is a material parameter in each business valuation and investment decision. The lower the market risk premium the higher is the enterprise value based upon profit expectations.
Through its broad-based study I-ADVISE has determined the implicit market risk premium at quarter-end for all DAX, French CAC40, EuroSTOXX and Dow Jones Index-listed shares. The implicit market risk premiums are recalculated out of market capitalization, earnings forecasts by analysts, current base rates and the specific risk which is factored through the beta factor concept for each share at each quarter-end by using an income approach model. The results are condensed in a market risk premium for the market as a whole.
For DAX-listed companies the implicit I-ADVISE market risk premium totals 6.6 % (weighted average, pre-tax) during the period March 2008 to June 2014. These are 100 base points below EuroSTOXX 50-listed companies.
To a large extent the market risk premiums showed a parallel trend between the markets concerned. Nevertheless mean values swung in an extensive way – between 3.9 and 9.4 percentage points for DAX 30 companies.
For European markets the implicit market risk premium is presently around 100 base points below average since first quarter 2008, but rebounds at last.
“Any temporary changes of market risk premiums may be relevant within stock trading even if such are caused by exaggerations in the one or the other direction. But market risk premiums for just a single point in time should not be over-interpreted as a distortion may result out of delays in adjusted earnings forecasts and special items. For long-term investment an appropriate average return on the acquisition should be achieved over several years. As a result the investor should consider a long-term average market risk premium” clarifies Dr. Jochen Beumer, I-ADVISE AG.
As yet the study is only available in German. You can download the study here.