BUSINESS VALUATION UNDER CURRENCY DEVALUATION: A CASE STUDY OF NIGERIAN LISTED FIRMS' MERGERS AND ACQUISITIONS

Authors

  • ENIWO EFEZINO ARUOTURE ANAN Business School, ANAN University Kwall, Plateau State Author
  • MUSA ADEIZA FAROUK ANAN University Kwall, Plateau State Author
  • DAGWOM YOHANNA DANG ANAN University Kwall, Plateau State Author

Keywords:

Enterprise value, business valuation, mergers and acquisitions, foreign exchange risk, macroeconomic volatility, inflation, financial reporting, currency devaluation.

Abstract

Currency devaluation presents formidable challenges to business valuation, particularly in emerging markets like Nigeria where macroeconomic volatility is endemic. This study explores how the 2023 naira floatation and ensuing devaluation impacted valuation outcomes for Nigerian listed firms involved in mergers and acquisitions (M&A). Using case studies for Access Bank, MTN Nigeria, and Dangote Cement, this study explores how foreign exchange losses, inflation pressures, and enterprise value distortions rewrote valuation methods and investment plans. The study concludes that pre-devaluation valuation methodologies employed extensively relative stability assumptions for exchange rates, leading to inflated enterprise values and minimal FX risk incorporation. The post- devaluation scenarios, however, show extreme dollar-based valuation volatility, reset discount rates, increased cost of capital, and increased currency exposure due diligence. MTN Nigeria recorded over ₦740 billion in FX losses, while Access Bank and Dangote Cement experienced declining valuation multiples as well as distressed capital positions. The evidence further reveals that devaluation triggered strategic shifts in acquisition structuring such as staggered payment and FX-indexed terms in transactions. Investor behavior parted ways—foreign investors employed conservative, hedge-based approaches, while local investors utilized valuation arbitrage to acquire assets at discounted dollar-equivalent prices.

The study finds that devaluation of currency has turned business valuation into a strategic decision-making process of a high order as opposed to a fixed financial calculation based on macroeconomic, regulatory, and operating considerations. Proposed recommendations are adaptive building of valuation models by analysts, managers, and policymakers; acceptance of flexible deal structures; and macroeconomic transparency for establishing investor confidence in volatile currency markets.

Downloads

Download data is not yet available.

Downloads

Published

2025-10-01

How to Cite

ENIWO, E. A., MUSA, A. F., & DAGWOM, Y. D. (2025). BUSINESS VALUATION UNDER CURRENCY DEVALUATION: A CASE STUDY OF NIGERIAN LISTED FIRMS’ MERGERS AND ACQUISITIONS. ANUK College of Private Sector Accounting Journal, 2(2), 275-286. https://anukpsaj.com/psaj/article/view/139

Most read articles by the same author(s)

1 2 > >>