Role of the 1982 World Bank Guidelines on the Treatment of Foreign Direct Investment in the Valuation of Going Concerns and Non-Going Concerns

This WAW panel will explore the role of the 1982 World Bank Guidelines in the valuation of entities that are “going concerns” and others that do not qualify as such. Tribunals frequently utilize the income approach by applying the discounted cash flow (DCF) methodology to going concerns, as defined in the Guidelines. As almost four decades have passed since the Guidelines were published, some tribunals have used alternative methodologies in order to determine the market value of investments and entities—including the market approach by relying on a comparable public company or a comparable transaction. This panel will address some of the following questions: 

• What is a “going concern”?   
• What method of valuation should apply when an investment is or is not a going concern?  
• What are the alternative methods of valuation? 
• Should the Guidelines be updated, and if so how, to account for and incorporate those alternative methods relied upon by damages experts and tribunals during the las 40 years