How to Improve Valuation Accuracy with Benchmarking

Emerging Markets Demand Smarter Valuation Tactics

|  Growth Potential Meets Data Complexity

Emerging markets, particularly in Asia, represent one of the most compelling frontiers for private equity and venture capital investment. Southeast Asia, for instance, combines strong macroeconomic fundamentals with favourable demographics and digital growth. However, these markets also come with elevated uncertainty—ranging from volatile currency environments to regulatory opacity and political risk.

While the opportunities are substantial, so too are the challenges in arriving at an accurate valuation. Traditional models often fail to account for market idiosyncrasies, leaving investment professionals exposed to risk or, conversely, causing them to overlook viable opportunities due to overly conservative assumptions.

|  Traditional Risk Premiums Obscure Value

A common misstep in emerging market valuation is the mechanical addition of a country risk premium to the cost of capital. Although intended to compensate for uncertainty, this method can unintentionally inflate discount rates and suppress valuations, especially when applied indiscriminately across sectors or asset classes.

Instead, valuation professionals should prioritise scenario-based cash flow modelling and robust benchmarking. These approaches offer a more transparent view of risk by grounding assumptions in company-level dynamics and peer performance, rather than broad, often unrelated macro proxies.

Southeast Asia’s Valuation Challenges Are Unique

|  Sparse Company Disclosures Undermine Comparability

Unlike developed markets, Southeast Asia lacks uniformity in corporate disclosures—particularly among private companies. Financial statements are not always audited, timely, or even publicly available. Furthermore, reporting standards and requirements differ significantly from one country to another, complicating efforts to conduct apples-to-apples comparisons.

This lack of transparency limits analysts’ ability to validate forecasts or assess quality of earnings. For early-stage ventures or family-run SMEs, even basic financial indicators like EBITDA or return on invested capital (ROIC) may be unavailable or inconsistently reported.

|  Insufficient Peer Data Skews Multiples

Another challenge is the absence of reliable peer sets for benchmarking. When local data is sparse, practitioners often resort to global comparables that fail to reflect local market conditions. As a result, valuation multiples may be derived from irrelevant sectors or geographies, diminishing the precision of enterprise value estimates.

This issue is particularly acute in niche industries or frontier markets, where few listed comparables exist. In such cases, the absence of grounded benchmarks can lead to wide valuation ranges that hinder deal execution, capital allocation, and stakeholder alignment.

Peer Comparison Anchors Valuation in Reality

|  Localised Benchmarks Are More Predictive

Peer comparison is one of the most widely used and accepted tools in valuation. But its effectiveness hinges on the quality and relevance of the peer set. Using large-cap global benchmarks to value a mid-market logistics player in Vietnam, for example, is unlikely to yield accurate results.

More effective is a bottom-up approach that builds a peer universe based on region, size, growth stage, and business model. This ensures that valuation metrics—such as EV/EBITDA or EV/Revenue—reflect realistic performance expectations and risk profiles aligned with the target company.

|  Case-by-Case Calibration is Essential

Even among local peers, no two businesses are alike. Analysts must adjust valuation inputs to reflect company-specific factors such as customer concentration, margin volatility, or exposure to commodity cycles. Scenario modelling adds further depth by enabling teams to quantify the impact of both upside opportunities and downside risks. This approach also helps remove arbitrary premiums or discounts and instead links valuation outcomes to identifiable business drivers. It shifts the conversation from vague risk perceptions to concrete, actionable insights—a critical advantage in competitive deal environments.

Benchmarking with Reliable Data Sharpens Valuation Precision

|  From Manual Aggregation to On-Demand Intelligence

Historically, building a peer set meant manually gathering data from disparate sources—corporate filings, industry databases, news articles, or even local contacts. This not only consumed time, but also introduced inconsistencies in data quality and structure.

Modern business intelligence platforms are transforming this process. This dramatically reduces the effort and time required to build relevant peer sets and extract actionable insights. For investment teams managing tight timelines and multiple deals, such tools shift focus from data collection to analysis and decision-making—where true value is created.

|  Scenario-Based DCFs Need Grounded Inputs

A discounted cash flow (DCF) model is only as robust as the assumptions that underpin it. Without reliable benchmarks, growth forecasts, margin assumptions, and terminal values are little more than educated guesses.

Robust benchmarking capabilities allow analysts to validate these assumptions against actual performance of comparable companies. For instance, an early-stage health tech firm in Indonesia may forecast a 35% EBITDA margin—but if regional comps average 18%, the model can be recalibrated accordingly. This reduces bias and aligns projections with market realities.

Improve Valuation Accuracy in Asia’s Complex Markets

Valuing companies in emerging markets like Southeast Asia demands more than traditional models and generic risk premiums. Sparse disclosures, inconsistent data quality, and lack of relevant peer benchmarks can distort valuation models—leading to missed opportunities or mispriced risk.

Speeda is Asia’s leading business intelligence platform, built to empower investment professionals with robust, localised, and on-demand data. With coverage of over 11 million private companies—including deep financials where available—Speeda enables users to build reliable, comparable peer sets that reflect local market realities. We help you anchor assumptions in real, context-specific insights.

Reach out to us to explore how Speeda can support your investment strategy today.