The payback period for the purchase of foreign assets has fallen below three years – Kommersant
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Foreign companies purchased by Russian investors can pay for themselves in less than three years. This assessment RBC brought to the financial and investment company Advance Capital. This trend is due to the tightening of conditions for foreigners to leave the board of directors, as well as rising rates and depreciation of assets.
The payback period allows you to estimate how long it will take to pay off the cost of acquiring a company with foreign participation. This figure has declined for the second year in a row. To estimate the payback period, the EV/LTM EBIDTA ratio is used. EV, or Enterprice Value, is the value of the company, EBIDTA is the company’s profit before interest and income tax, and LTM (Last Twelve Month) is the period for which the indicator was taken.
The median ratio of this indicator for acquired foreign companies was 2.8x, that is, the cost of the company will pay off in less than three years. At the end of 2022, this figure was equal to 3.3x, and at the end of the pre-crisis 2021 – 7.3x.
The average indicator for the Russian market, which takes into account all transactions, rose to 4.1x last year compared to 3.8x a year earlier. The increase is due to a gradual reduction in the number of such transactions. However, this level is still much lower than the values of 2020–2021 (more than 7x). The highest rates were for deals in the technology, media and communications (TMT) sector, at 5.7x, and the lowest for deals in heavy industry, or 2.2x.
Read more about the sale of Russian businesses to foreign companies in the material “Bargaining is inappropriate there”.
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