BV526 Financial Metrics Volatility for Contingent Consideration
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This presentation will show the participants how to determine the Revenues, Gross Profit and EBITDA volatility used as input in the option model utilized to value the contingent consideration, a common part of a M&A transaction. The presenter will discuss a full case study covering the method used for unlevering equity volatility, as well as how to size adjust the volatility based on their best practice method published in the Business Valuation Review. In addition, the presenter will share with the audience their newly published research on 20 years of historical financial metrics volatility that could be used as benchmark for determining volatility without a complex methodology.
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Continuing Education (CE) and (CPE) Information
This webinar will award 2 CE/CPE hour(s).
If you are a designated member of ASA, CE credit will automatically be entered into your record after you participate in the live webinar. Please allow 2 weeks post-webinar for ASA to grant access to a certificate of completion.
Vincent Covrig | Crowe LLP
Vincent Covrig, PhD, CFA, is a principal in the Crowe LLP advisory services group specializing in the valuation of complex securities and transactions. Mr. Covrig has over 15 years of experience in the valuation of compensation awards, preferred stock, contingent considerations, embedded derivatives and debt valuation. He has presented at ASA and NACVA conferences, teaches classes at the California State University, Northridge and has published more than a dozen papers in top academic and practitioner journals, including the Business Valuation Review.
- Need of metric volatility for contingent consideration
- Size adjusting the volatility
- Determining the Asset/EBITDA volatility
- Determining the Gross Profit/Revenues volatility
- Crowe’s research on actual historical metric volatility
- Case study on determining Revenues volatility
- Determine and apply the financial metric (e.g. Revenues, Gross Profit, EBITDA) volatility;
- Calculate the leverage adjusted volatility;
- Calculate the size adjusted volatility; and
- Utilize data and research on historical financial metric volatility.