Business valuation outcomes are a reflection of the story line of the financial figures that serve as input for these valuations. Given the new and expanding view on risks and opportunities associated with businesses, viewing the development of industry and market forces not just with a financial lens but also with an ESG lens, and incorporating them in the cash flows and discount-rate analysis, is a need of the hour.
In this article KPMG sets out the ways in which the outside-in impact of ESG factors on the prospects of businesses could be taken into account in the cash flows and discount rate calculations to perform business valuations, as it is imperative for investors and management of businesses to assess the value drivers of businesses with not just a financial lens but also with an ESG lens.
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