“Stock prices have gone up a lot in Romania, too, and this is a sign the economy has grown or the investors’ perception has improved compared with one or two years ago,” Lars Wiechen said.
The main index of the Bucharest Stock Exchange rose by 9% last year after a 26% surge in 2013.
The consultant has been recently appointed to his position at Deloitte, where he supervises the valuation and business modelling department. He came to Romania nine years ago and since then has been valuing more than 20 companies a year. One of his first projects and also the most important was the valuation of the BCR brand, which in 2006 was worth about EUR360 million (Austria’s Erste bought 60% in BCR that year and paid EUR3.75 billion for it).
German-born Lars Wiechen built his career in consultancy companies like PwC and EY and in the time spent in Romania he learnt Romanian, which he says is hard but nonetheless speaks very well. His interview with ZF was in Romanian.
He started his term nine years ago in a time when it was necessary to reassess some intangible assets like brands, contracts, licenses that were not recognized in balance sheets and says this is how his work in Romania began.
Are Romanian assets undervalued?
“If we’re talking book value, I agree (that Romanian assets are undervalued i.e.). I mean tangible assets – a network, a pipeline, plant and equipment. They are definitely undervalued. There are certain assets we do not recognize in Romania, the intangible assets. For instance, you won’t find a bank in the US that does not accept an established brand as collateral. Here I found two banks that requested the valuation of the brand for collateral.”
He appraised three Romanian retail brands, all of them small, in the past year and all were accepted as collateral by banks. The practice of pledging brands as collateral is hardly used in Romania, as banks usually prefer tangible assets.
“Banks are more interested in real estate, land, buildings. That is what they want, that is what they know, that is what I can sell in a bankruptcy. Still, there is a market for brands. Brands are very often traded in the US, Germany, in the West. It’s nothing new but here, in Romania, we tend to look more at tangible assets. We are a very rich country in terms of assets, but still have to learn.”
The valuation of a company is done in a merger and acquisition process, when applying for a loan, when the management wants to know where it stands and in case of lawsuits. Lars Wiechen says this valuation in case of lawsuits is his favorite because it is a growing business.
He has mostly done valuations of banks and energy and utility companies so far and says the valuation business was profitable until 2008, when competition increased. Valuation fees then fell by as much as 50%, due to the decline in demand, especially on the mergers and acquisitions market.
Company valuation decline was at its worst in 2010, and started growing after that. Now it is back at a reasonable level, which the consultant says is the new normal.
(English version by Loredana Fratila-Cristescu)