Valuation in Emerging Markets: The Art Behind the Science

Valuation in emerging markets is as much art as science. While the fundamental methodologies—DCF, comparable companies, precedent transactions—remain the same, their application requires significant judgment and local market knowledge.

The Discount Rate Dilemma

Determining appropriate discount rates in markets with limited public data, volatile currencies, and evolving risk profiles is one of the most challenging aspects of emerging market valuation. Standard CAPM approaches often produce misleading results.

Comparable Company Challenges

Finding truly comparable companies in emerging markets is often impossible. The solution lies in creative peer group construction, thoughtful use of global comparables with appropriate adjustments, and triangulation across multiple methodologies.

The Human Element

Ultimately, the best valuations in emerging markets are produced by practitioners who combine technical rigor with deep market intuition. Numbers tell part of the story; understanding the context behind those numbers tells the rest.