Stéphane Bellanger, a member of the SFAF's Valuation Committee, discusses the challenge of valuing social enterprises using traditional valuation methods and calls for alternative approaches.
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In a rapidly changing economic landscape, where social impact is becoming a key performance criterion, social enterprises are at the forefront of a revolution in value assessment. This emerging trend highlights the importance of a holistic approach that harmonises economic and social objectives, challenging traditional valuation methods based primarily on future cash flows.
Social enterprises, with their primary objective of creating social impact, face a major challenge: how to assess their real value? Traditional methods, while effective in verifying economic viability, often fail to capture the extra-financial dimensions essential to these enterprises. At the same time, alternative valuation methods, while ambitious, struggle to provide clear and reliable information to guide investment decisions, leaving a gap in terms of consensus and practicality.
In response to this challenge, three innovative approaches are proposed. The first suggests adopting a financial logic that recognises the renunciation of a certain level of profitability in favour of maximising social wealth. This approach could lead to the recognition of "Corporate Social Intangible Capital", an innovative concept which, however, raises delicate questions in terms of declaration and the risk of overvaluation.
The second approach encourages systematic monitoring and reporting of the positive externalities generated by social enterprises. This approach, potentially supported by tax incentives, could significantly improve recognition of the positive contributions made by these enterprises, while at the same time making governments more accountable for environmental and social issues.
The third approach, and perhaps the most innovative, is to assess the margin given up by social enterprises to maximise their social impact. This method, illustrated by the example of the mutual health organisations in Book II, offers a new perspective for assessing the real value generated by these organisations, over and above traditional financial criteria. It highlights the importance of measuring social impact in financial terms, recognising the voluntary financial sacrifice made by these companies in their quest for a broader societal impact.
These approaches, while promising, need to be explored further and tested to assess their feasibility and effectiveness. The adoption of these new valuation methods could transform the way social enterprises are valued and profoundly influence the future of social impact investment.
The emergence of a holistic approach to the valuation of social enterprises is essential to ensure that these organisations are properly valued and supported. The avenues outlined in this article offer promising prospects for meeting this challenge, paving the way for a new era in which the value of enterprises is measured not only in economic terms, but also in terms of their profound and lasting societal impact.
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