FTI Consulting South Africa 2021 Valuations Survey

Assessing the Impact of Covid-19 Related Lockdown Restrictions on Valuations

The COVID-19 pandemic is an unprecedented global crisis, affecting human health and economic welfare across the globe. In response to COVID-19, the Government of South Africa implemented one of the most severe lockdowns on the continent otherwise, the human costs of the pandemic could have been even higher. It is against this backdrop that our survey seeks to understand how business valuations have been impacted by COVID-19 related economic effects emanating from lockdown restrictions, new variants, anticipated global economic recoveries, how these have been incorporated in valuations, and whether conventional metrices and models are needed to be adjusted.

The global recovery is expected to help South Africa, especially given strong performance from its two key trading partners being, China and United States. The severe economic impact caused by COVID-19 is not equally distributed across sectors and businesses. We observed a reduction in the volatility between different sectors around the total real GDP growth in 2021 compared to 2020. It is our observation, based on the outcomes of the survey, that valuations for these businesses have been impacted.

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The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.

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March 09, 2022

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