- Dispute work is the key business valuation practice area
- The risk-free rate adopted in 2022 has increased compared to 2021
- Incidences of impairment have risen since 2021, primarily in the construction and retail trade sectors
Insights from CA ANZ’s third annual Valuation Practice Survey, previously undertaken by KPMG, identifies key issues, challenges and trends arising in business valuations. Key findings are summarised here, with the full report available for download at the bottom of this page.
Key input observations include that at 30 June 2022:
- The adopted risk-free rate has increased, with the majority of respondents adopting a rate above 2%, with a rate of between 3.0% and 3.9% most commonly cited (2021: between 1.0% and 1.9%)
- Most Australian respondents adopt a market risk premium of between 6.0% and 6.9%. Most New Zealand respondents identify 7.0% and 7.9%, and 5.0% and 5.9% in Malaysia, although the survey sample size in these two countries was small
- Respondents identify a wide cost of debt, of between 4.0% and 6.0%.
With respect to changing business valuation practices indicated by respondents:
- Average valuation report fees are higher in 2022 than 2021, with over 70% of respondents now reporting charging at least $10,000 for a valuation report
- Disputes is the key business valuation practice area, with non-family law disputes slightly more common than family law disputes
- The International Valuation Standards Council resources are the business valuation resources most commonly used
- More respondents report an increase in incidences of impairment in 2022 than 2021, with increases primarily in the construction and retail trade sectors.
Disputes now top the list of valuation practice areas, the risk-free rate has increased since 2021 and respondents indicate a rise in impairments in the last twelve months
About the survey
The 2022 Valuation Practice Survey was conducted in August 2022. It includes results from 67 respondents working in valuation-related disciplines. Nearly 80% of respondents had at least ten years of business valuation experience, with half having over 20 years of business valuation experience. The survey was conducted by CA ANZ and distributed online to CA Business Valuation Specialists.
The survey was developed in collaboration with the CA ANZ Business Valuation Committee, all of whom are CA Business Valuation Specialists.