{"id":10403,"date":"2019-07-09T06:48:06","date_gmt":"2019-07-09T06:48:06","guid":{"rendered":"https:\/\/www.certitrek.com\/isba\/?p=10403"},"modified":"2021-06-24T15:02:21","modified_gmt":"2021-06-24T15:02:21","slug":"view-on-valuations-chicken-little","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/isba\/view-on-valuations-chicken-little\/","title":{"rendered":"View on Valuations: Chicken Little"},"content":{"rendered":"

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In my opinion, Chicken Little has gotten a bad rap ever since he uttered the infamous line, \u201cthe sky is falling\u201d.\u00a0 More and more financial experts and professional prognosticators are pointing to numerous indicators that an economic downturn is imminent and that our extended period of economic expansion will stop.\u00a0\u00a0 Yes, hindsight is 20\/20 and one day we will all look back and jump on Chicken Little\u2019s bandwagon as we will see that our economic sky has fallen.<\/p>\n

In the assessment of the future income stream of a business, I become skeptical when a business owner projects hockey stick growth patterns into the future.\u00a0 And even those who are somewhat more reasonable and recognize that good times will eventually end often don\u2019t fully project a true economic downturn.<\/p>\n

2007 and 2008 are not that long ago when we suffered our last major economic contraction but we as business valuators must be realistic and recognize the Mr. Little did have some credibility which we should account for and recognize in our forecasting into the near term.\u00a0 Who knows what tomorrow may hold and many see growing cracks in our economic blue sky.<\/p>\n

Recommended Reading<\/b><\/span><\/p>\n