Jan 28, 2015

LBO in Foreign Currency

BlackUnicorn - Certified Professional
BlackUnicorn
Baboon 113 PE
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If I have all three statements in local currency, when calculating returns in USD, which forecast FX do you use?
Do you use estimated broker research spot rates for each year or the forward curve?
I've been thinking about this and can't make up my mind.
Thanks!

Keywords
currency
LBO
fx
returns
Region
United States - Midwest
South America
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3 Comments
 
FairValue's picture
Senior Orangutan
420
PE
9y
  • Internal macro research (if your firm produces one)
  • Bloomberg consensus (or any other analyst consensus - but I would avoid using forecast from only one broker)
  • Take today's rate and grow it with CPI (but you need CPI forecast - but it is readily available from dozens of sources for most countries)
  • Take some very pessimistic view (i.e. local currency depreciation by 5 or 10 percent per year depending on the history) and call it conservative scenario with "potential FX upside"
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pequiteer - Certified Professional
Neanderthal
3,008
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9y

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