On May 31, 2012, the Stuttgart branch of IMA Germany held its first meeting of the year at the offices of MPower GmbH in Stuttgart.
Dr. Helmut Diemer, Managing Partner of MPower GmbH, opened the meeting by speaking briefly about MPower’s management consulting business in Stuttgart and throughout Germany. He described the company, its history and its staff. He went into special detail about the firm’s specialization in restructuring of German small- and medium-sized businesses (SME) and its growing focus on cross border M&A transactions between Germany and China.
Thereafter, Dr. Werner Gleißner, Managing Director of FutureValue Group AG, held a presentation entitled “Risk Simulation, Rating and Valuation.” The FutureValue Group AG is a management consulting firm with core competencies in the analysis, modeling and planning, simulation, valuation, and the management of companies and financial services firms. Its focus is on strategy development, rating and financing, corporate valuation, portfolio/asset management, performance measurement, and risk management. Dr. Gleißner’s professional focus is on risk management, rating, and strategy development, and the further methodological development of risk aggregation and value-oriented corporate management tools and software. In addition to his responsibilities as Managing Director of FutureValue Group AG, Dr. Gleißner is a lecturer at various higher schools of education and at the universities of Dresden and Stuttgart. He is the author of numerous articles and books on corporate valuation and decision processes amid uncertainties and imperfect markets.
Dr. Gleißner’s outstanding presentation was based on his many years of experience in the field of corporate valuation and ratings. His key message to the group was that these processes often do not adequately take into account risk and uncertainties about future developments. Too often, argued Dr. Gleißner, ratings and valuations are based on outdated methodologies using historical data alone. Sometimes, he added, they contain methodological errors when incorporating the riskiness of future cash flows into forecasts and projections. Dr. Gleißner illustrated his arguments with several examples showing how this lack of consideration of risk and uncertainty in financial projections can lead to completely different valuation outcomes. Besides showing what can go wrong, Dr. Gleißner also explained what needs to be done to avoid these errors. He concluded his presentation with informal remarks about current efforts in Germany, both in private industry and in the public sector, to address the issues he raised.
A lively discussion about the failures of the ratings agencies in the financial crisis and their role in the current Euro crisis continued during dinner and rounded off a truly excellent presentation into the real world issues of incorporating risk and uncertainties in the valuation of companies.
IMA Members from Munich, Stuttgart, Pforzheim, and Karlsruhe were in attendance – and earned 2 hours of CPE credit.
News and Events >