Risk Roulette and Water Under the Bridge: Why Valuations Remain Steady Amid Global Volatility

In this year's round of risk roulette, the global economy is facing a familiar but volatile mix: Middle Eastern tensions, war in Ukraine, persistent inflation, trade tariffs, and rising energy prices. And yet—against this unstable backdrop—business valuations remain remarkably steady.

What’s going on? The answer lies in a mix of macro fatigue, recalibrated expectations, and a disciplined focus on fundamentals.

Geopolitical Flashpoints: Background Noise or Real Threat?

Escalating strikes between Israel and Iran, renewed fighting with Hamas, and continued instability in Ukraine have triggered fresh spikes in oil prices and commodity volatility. These geopolitical events can cause ripples across global markets, especially in energy, defense, and shipping.

But for appraisers and investors, much of this has become water under the bridge. Markets have adjusted to a world in which uncertainty is the norm, not the exception. Unless the risks translate directly into sustained disruptions in supply chains, labor markets, or access to capital, their impact on long-term business value remains muted.

The Energy Equation: Oil Prices as a Silent Tax

Where the risks do get more tangible is in energy pricing—and it’s here that appraisers should pay closer attention.

Surging oil prices, whether driven by war near key production zones or OPEC+ manipulation, act like a silent tax on both businesses and consumers. Transportation costs go up. Input costs rise for manufacturers. Consumers may cut discretionary spending, which in turn affects B2C companies.

For lower-margin industries—logistics, agriculture, and some manufacturing—this can erode EBITDA quickly. For SaaS or asset-light businesses, the impact is often indirect. Still, when energy spikes persist, they bleed into inflation data and can influence discount rates and growth assumptions.

The key takeaway for valuation specialists:

• Model margin compression realistically where energy is a core input.

• Consider pass-through ability—does the company have pricing power or customer contracts indexed to fuel?

• Watch cost of capital—as oil pushes inflation up, interest rates may stay higher for longer, raising equity risk premiums.

  
  

Tariffs, Inflation & Supply Chains: Known Variables

Tariffs—especially between the U.S. and China—have re-entered the narrative, but they no longer spark the fear they once did. Most businesses have localized or diversified their supply chains, mitigating tariff shock.

Inflation remains sticky, but much more contained. The market has adapted, and financial forecasts now incorporate more sober assumptions for wage growth, cost of goods, and interest rates. As a result, we're seeing normalized valuation multiples, not wild swings.

Valuations: Calm in the Storm

Despite all this, private market activity remains strong:

• Dry powder in private equity is still high, and dealmaking has resumed pace—especially in healthcare, infrastructure, and software.

• Strategic buyers continue to pay healthy multiples for assets that align with their growth roadmap.

• Discount rates have stabilized, and appraisers are largely using forward-looking market inputs instead of overcorrecting for short-term fear.

  
  

Valuation professionals are focusing on:

• Normalized, forward-looking earnings.

• Sensible discount and cap rates tied to actual risk exposure.

• Differentiating between macro noise and company-specific fundamentals.

Oil prices will rise. Conflicts will flare. Inflation will ebb and flow. But valuation, at its core, is about isolating risk, understanding business resilience, and staying grounded in evidence—not emotion.

In chaotic times, appraisers are like Liberty in Delacroix’s painting—not swept up in the smoke of revolution, but leading with clarity and conviction through the noise. While the world lurches from one crisis to the next, it’s our discipline, not drama, that lights the way forward.