Forest valuations are commonly carried out using one or more of the following three approaches: the sales comparison approach, the cost approach, and the income approach. Although in Finland a method called summation value is commonly applied, the income approach is increasingly gaining popularity as the forest asset class gains ever more attention from institutional investors. Outside Finland, we have conducted valuations in Sweden, the Baltics, Brazil, Colombia and Kenya.
- Cost-effective calculation of discounted cash flows of any forest asset
- Compatibility with IFRS and GAAP standards
- Expertise in growth & yield modelling and timber markets
- Capacity for scenario building, including price scenarios for timber and carbon
- Companies with the need for forest valuation for accounting purposes
- Forest owners who are looking to sell or buy forests
- Investors acquiring or selling forest assets
Our approach to forest asset valuation
In principle, while forest asset valuations could be conducted with a sales approach, the heterogeneity of forests and even in plantations (species, yields, terrain) inhibit trustworthy comparisons even within relatively small geographical regions.
Following the industry’s best practices, we typically use the income approach to value forest assets. To achieve this, and thanks to our extensive experience in building the industry’s leading simulators and optimisation systems, we use our own IPTIM assets to project discounted cash flows and attain income approach based value. To meet the requirements of international clients, we have adapted our methods to be compatible with IFRS and GAAP. The required inputs used in the process include forest inventory data, management objectives and market data.
Semi-automated forest valuation
Our semi-automated forest valuations are aimed at entities that own large forest areas, typically thousands of hectares. Our tools can efficiently process large forest areas, in excess of hundreds of thousands of hectares, and produce their future harvest removal schedules and consequent cash flows.
With our tools and processes, forest valuations can be automated to a large extent. Because of multiple factors, such as location-specific issues, information availability, or reporting requirements, the valuation of companies’ forest assets requires tailoring as well as expert judgement. The depth of each valuation is always mutually agreed on a client basis.
Metsä ja Puut service
The service can be accessed by anyone directly on the web portal and it is charged based on either specific usage or through a fixed subscription.