Encouraging rebound

Private sector sees hopeful rise in valuations

Amandeep Sahota: ‘small but steady rebound’

Britain’s private companies are seeing their collective wealth slowly rise as the country emerges from the three-month lockdown.

These firms have combined turnover of more than £3.3 trillion and employ more than 15 million workers, making the sector a substantial part of the economy.

Their combined valuation has risen by about 14% from 30 April to 1 June, according to data from Unlisted, the Glasgow-based real-time private company valuations engine.

Overall private company valuations are still 39.3% lower than the levels they reached at beginning of March, when concerns about the Covid-19 epidemic gripped the UK.

However, the rise will be seen as a sign of resilience by firms which have withstood severe pressures on balance sheets.

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The computer hardware sector has rebounded considerably, its median valuation multiple climbing 35.8% from is lowest levels as the country geared up for remote working.

The transport, petroleum and retail have been hit hard, shedding 48.9%, 50.4%, and 47% in June since March.

CEO of Unlisted Dr Amandeep Sahota commented: “The small but steady rebound in private company valuations is to be welcomed coming after such a significant decline earlier in the Covid 19 crisis, and shows that private companies are tracking to some extent the behaviour of publicly traded markets.  

“That recovery in prices will be welcomed by entrepreneurs, who along with their employees have been working hard to keep the economy afloat during this unprecedented crisis.

“At the same time the decline in valuations will be welcomed by private company investors who will be able to snap up stakes in closely-held businesses at value levels, much the same as fund managers are doing in the stock market at present.” 

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