An assessment of valuation techniques in investment banking transactions: a case study of Fidelity Bank Nigeria
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Background of the Study
Valuation techniques are central to investment banking transactions, as they underpin decisions on mergers, acquisitions, and capital allocation. Fidelity Bank Nigeria has been at the forefront of adopting innovative valuation models to better assess the worth of complex financial instruments and corporate entities. In an era marked by technological advancements and dynamic market conditions, traditional valuation methods are increasingly being supplemented by advanced analytics and risk-adjusted discount models (Adesina, 2023). Fidelity Bank’s commitment to integrating these modern approaches has led to more informed decision making and enhanced transaction outcomes. Recent literature highlights that a rigorous valuation process not only ensures accurate pricing but also enhances investor confidence and market transparency (Mustapha, 2024). The bank’s evolution in this domain reflects broader industry trends where digital tools and machine learning algorithms are being employed to refine valuation estimates. This study explores the various valuation techniques utilized by Fidelity Bank, including discounted cash flow (DCF) analysis, comparable company analysis, and real options valuation. By examining these methods, the research sheds light on how the bank addresses the inherent uncertainties and risks associated with investment transactions. The background also considers external factors such as economic fluctuations, market sentiment, and regulatory requirements that influence valuation outcomes. The interplay between these factors and the bank’s internal valuation practices provides a rich context for understanding both the benefits and limitations of current techniques. Emphasis is placed on the evolution of valuation methodologies over the past few years and the increasing importance of incorporating risk adjustments and market volatility into financial models. This analysis is supported by recent empirical studies and case examples that illustrate the practical application of these techniques in a rapidly changing economic environment (Olawale, 2025).
Statement of the Problem
Despite the adoption of advanced valuation techniques, Fidelity Bank Nigeria faces ongoing challenges in accurately determining the value of investment banking transactions. The primary problem lies in the persistent uncertainty inherent in financial markets, which can lead to valuation discrepancies and suboptimal decision making (Ibrahim, 2024). Traditional methods, while still relevant, may not fully capture the complexities of modern market dynamics—especially in an environment characterized by rapid technological change and regulatory shifts. This discrepancy is further complicated by the reliance on assumptions that may not hold true in volatile economic conditions, leading to potential mispricing and investment risks (Soyinka, 2025). Moreover, the bank’s valuation models often struggle to integrate real-time data and market sentiment, resulting in lagging indicators that do not reflect current conditions. The study aims to identify the limitations of existing valuation techniques and to determine how these shortcomings affect the overall transaction outcomes at Fidelity Bank. By addressing these issues, the research will contribute to the development of more robust, adaptive valuation models that can better navigate market uncertainties. This gap in the literature is significant, as precise valuation is critical for both transaction success and long-term strategic planning. Consequently, understanding and mitigating these challenges is essential for enhancing the bank’s competitive positioning and ensuring sustainable growth.
Objectives of the Study
– To critically assess the effectiveness of current valuation techniques at Fidelity Bank.
– To identify the key limitations and challenges associated with these methods.
– To propose improvements and innovative approaches for more accurate valuation in investment transactions.
Research Questions
– What are the most commonly used valuation techniques at Fidelity Bank Nigeria?
– What limitations do these techniques face in accurately pricing transactions?
– How can the integration of advanced analytics improve valuation accuracy?
Research Hypotheses
– H1: Advanced valuation models significantly enhance pricing accuracy.
– H2: Limitations in traditional techniques negatively affect transaction outcomes.
– H3: Incorporating real-time data analytics improves the robustness of valuation estimates.
Scope and Limitations of the Study
This study focuses on valuation practices within Fidelity Bank’s investment banking transactions. Limitations include the availability of proprietary data and the rapidly changing market conditions which may affect model assumptions (Olatunji, 2023).
Definitions of Terms
– Valuation Techniques: Methods used to determine the financial worth of assets or companies.
– Discounted Cash Flow (DCF): A valuation method that estimates the value of an investment based on its future cash flows.
– Real Options Valuation: A technique that accounts for the value of managerial flexibility in investment decisions.
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