Understanding Qualitative Assessments in Valutico
Valutico's Qualitative Assessment allows you to adjust various factors—such as company size, leverage, and management quality—to apply a discount to trading multiples. Each factor carries a specific weight, ranging from 1% to 35%, depending on its relative impact on valuation.
How Are Weightings Determined?
The weighting of each qualitative factor is based on the extent to which it can influence a company’s valuation. For example, company size has a higher weight than currency risk because it generally has a more significant impact on valuation outcomes.
These weightings are derived from the insights and best practices of numerous valuation experts, ensuring they align with industry standards.
Flexibility in Applying the Qualitative Assessment
We recognise that qualitative assessments involve some level of simplification and may not be relevant in every valuation context. For example, they are less applicable to large listed companies.
Because of this, Valutico allows you to:
Manually override the assessment results if needed.
Skip the assessment entirely if it does not apply to your valuation scenario.
Additionally, many regulatory valuation frameworks (such as IDW S1 or KFS BW1) do not permit individual risk adjustments. In such cases, we recommend bypassing this section to ensure compliance.
How to Return to the Qualitative Assessment
If you initially skip the Qualitative Assessment but later decide to include it in your valuation, simply navigate to the "Qualitative Assessment" tab at the top of the page to revisit and adjust your inputs.
By offering flexibility in qualitative adjustments, Valutico ensures that users can tailor their valuations to meet specific needs while maintaining alignment with valuation best practices.