Defending a Valuation Against Client Pressure
Held a DCF-backed valuation under client pressure to inflate the number in an M&A context
Rashi Bansal
Financial Analyst at Northstar Analytics
From their time as
Financial Analyst
Northstar Analytics • 2024
Overview
Rashi was working on a valuation for a merger for co-working space when the client pushed back on the number her team had produced. The client wanted a higher figure (by 15%), one that would support the acquisition price they had in mind. The ask was to adjust the valuation upward.
The Story
Rashi was working on a valuation for a merger for co-working space when the client pushed back on the number her team had produced. The client wanted a higher figure (by 15%), one that would support the acquisition price they had in mind. The ask was to adjust the valuation upward.
She and the team had arrived at their number using three independent methods: a DCF forecast, M&A comparable transactions, and public comparable company analysis. Each method pointed to the same range. The convergence across all three gave the team confidence that the number reflected what the market was actually showing.
Rather than adjusting the output, she pushed back. The valuation was going to be used in an actual acquisition, and inflating the number would have meant presenting false market data to support a transaction. Rashi held the position, explained the methodology, and walked the client through why each of the three methods landed where it did.
The client ultimately agreed with the analysis and accepted the original valuation. This was for a live acquisition in the co-working space, where an inflated valuation would have misrepresented deal economics to counterparty.