IDW Practice Note 2/2018 revised and renamed

The Expert Committee on Business Valuation and Management (FAUB) of the Institute of Public Auditors in Germany (IDW) adopted the revised version of IDW Practice Note 2/2018 on 6 September 2023. At the same time, this was renamed IDW Valuation Notice 1/2023 Consideration of the debt-equity ratio in the valuation of companies.

The valuation notice was expanded to include explanations on insolvency costs as well as changes in the operational capital structure risks and indicators for default risks caused by this. For the valuation of over-indebted companies for which a classic objectified valuation is not possible, the possibility of an objectified valuation under the condition of a successful restructuring was added. Furthermore, the valuation notice contains clarifications of terms, especially regarding capital structure and default risks.

The IDW Valuation Guideline 1/2023 will be published in issue 10/2023 of IDW Life.