As a so-called valuation experts we look at the COVID-19 pandemic from business and valuation perspectives. In the short term there was a clear perception in the public markets of enhanced risk. Multiples fell while companies and analysts attempted to get a grip on anticipated cash flows.

But treasury rates were falling, mitigating the slide in multiples. Regardless, intuitively, risk increased some.

Then there has to be an intensive focus on during and post-pandemic cash flows. All else equal, public markets are focused on expected future cash flows. And not all market participants will have identical future expectations.

I’ve said for many years that we value private companies and their expectations with a rear view mirror focused on valuation-date expectations in the public markets and private transaction markets.

The same advice is true now, although market guidance may not be crystal clear.

Over a fairly long career the markets have been crazy during the energy crisis, the real estate induced recession in the mid 1970s, the recession in the early 1980s, the Black Monday debacle in 1989, the recession in the early 1990s and on and on. But the public and private market valuations have recovered and grown on balance. And I’m guessing that will be true of the COVID-19 virus.

Professor Damodoran is correct. The public markets are assessing inherent risk of the pandemic in light of specific expectations for future cash flows industry segment by segment.

Private company values must be similarly asses.