The seventh factsheet in the global economic downturn series looks at one of the most commonly-used business valuation methodologies: Future Maintainable Earnings (FME). 
 
Authored by Manda Trautwein CA, Director at William Buck, the factsheet emphasises the potential impact that the current economic environment could have on the application of the FME valuation method to a private company, assuming Earnings Before Interest and Tax (EBIT) is used as the earnings base.  
 
Specifically, the factsheet examines future maintainable earnings, choosing an earnings multiple and private company discounts. The factsheet outlines the basics of each factor along with the global economic downturn impact.  
 
This factsheet should be read in conjunction with the guidance document, which provides guidance on how the future maintainable earnings method can be used in impairment testing.  
 
The complete series is published on the Institute’s website in the section dedicated to global economic downturn resources.  
 
Resources from overseas 
Meanwhile, accounting bodies across the globe have published a number of other useful articles and resources to help navigate the current economic climate:

• Guiding clients through the tough times (Canada)
• Going concerns (England & Wales)
• Economic Crisis Resource Centre (USA).

• The Institute: factsheet seven – Using EBIT multiples
• The Institute: factsheet six – Enforcement of judgment debts
• The Institute: factsheet five – Banking on relations
• The Institute: factsheet four – Part two, insolvency
• The Institute: factsheet four – Part one, insolvency
• The Institute: factsheet three – Discounted cash flow analysis
• The Institute: Guidance document on impairment to accompany factsheets three and seven
• The Institute: factsheet two – Employee matters
• The Institute: factsheet one – Trim the fat not the staff
• The Institute: Global economic downturn resource page