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Amidst ongoing macroeconomic uncertainty, companies have made a strong shift toward real world tangible assets. These are assets that provide durable inflation protection and strategic exposure like transportation assets, digital infrastructure such as data centers and energy assets. In our view, accurate and timely valuation during the due diligence phase is critical in this environment—it underpins reliable internal rate of return (IRR) calculations and serves as a crucial foundation for informed price negotiation.
Buyers targeting complex asset acquisitions often face challenges in accurately assessing the true value of underlying assets when typically only historical cost information is available in the diligence process. By adopting a thorough valuation approach that considers alternative uses, highest and best use scenarios and flexibility amid shifting market conditions, buyers can better identify and quantify both opportunities and risks before the ink dries on a deal.
Setting the stage
Elevated financing costs are impacting companies’ capital allocation decisions due to higher-for-longer interest rates. Meanwhile, costs of critical inputs like iron and steel—key materials extensively used in infrastructure and machinery construction—remain elevated. Although prices have moderated since their peak in 2021, U.S. Bureau of Labor Statistics data shows that iron and steel prices in early 2025 were approximately 40% to 50% above the 10-year average from 2010 to 2020. These factors drive investor preference for resilient, inflation-linked cash flows, as fixed-income yields continue to lag rising inflation.
PwC's US Deals 2025 midyear outlook noted that M&A leaders are searching for opportunities to insulate their companies by investing in supply chains and shifting to more stable sectors or assets. These include transportation assets, digital infrastructure such as data centers and energy assets aligned with strong policy support such as the continued deployment of $1.3 trillion under the Infrastructure Investment and Jobs Act.
Key themes we’re seeing driving interest in real-economy assets include:
- Supply-chain reconfiguration: Reshoring and nearshoring are increasing demand for logistics infrastructure, ports and rail, utilities and reliable domestic power.
- Digitalization and AI: Rapid growth in data centers, AI energy consumption, fiber, towers, small cells and subsea cables have made digital infrastructure a core allocation.
- Energy transition: Trillions are needed for renewables, storage, grid modernization, transmission, flexible generation, EV charging and efficiency—creating a deep pipeline of investable projects.
- Diversification and resilience: Low correlation to public markets, tangible collateral and regulated or contracted frameworks appeal in volatile macro environments.
- Private credit convergence: Bank retrenchment and tighter underwriting have opened room for infrastructure and private credit to finance projects and equipment with asset-level security.
Corporate development teams, CFOs and other dealmakers can gain an edge in this environment by adopting a more thorough valuation approach. This involves evaluating multiple scenarios and stress-testing key assumptions to uncover potential upside and downside outcomes.
Beyond reconciling book values to fair value, disciplined buyers focus diligence on cash-flow durability and contract quality, true cost to operate (maintenance and major overhaul profiles, OEM support and availability), permission to operate (permits, zoning, title/site control and encumbrances), technology and cyber resilience (obsolescence risk, vendor concentration, cybersecurity posture), and tail exposures (environmental and decommissioning liabilities, insurance adequacy, and regulatory change). They also review financing and exit flexibility (covenants, hedging, residual values) so price, structure and post-close plans reflect both downside protection and identified upside.
As a result, buyers are empowered to negotiate and structure deals that align with their strategic objectives. They also can develop tailored risk mitigation tactics during due diligence and remain responsive throughout transaction execution and ongoing asset management.
Without such detailed analysis, buyers risk mispricing assets, encountering unexpected liabilities or overlooking avenues for value enhancement. Preparing for this complexity enables more informed decisions and supports long-term investment success.
Valuation implications for asset intensive deals
As capital rotates into real assets, traditional accounting book measures such as net book value (NBV) are not meant to be a measure of fair value over time. While NBV is useful for tracking recovery of original historical cost, it is not designed to indicate what an asset would fetch in today’s market. Simply put, depreciation accounting and the resulting NBV is a process of cost allocation, not of valuation. In periods of rapid technological change, supply-chain disruption, cost inflation and shifting demand, the gap between NBV and fair (market) value can widen materially. In practice, many dealmakers use NBV as an initial, indicative anchor to size an opportunity and frame early price discussions. They then refine the preliminary view of value by systematically applying the considerations outlined below to converge on a supportable deal price.
Reasons why NBV diverges from fair value:
The bottom line
In today’s complex macroeconomic landscape — characterized by inflationary pressures, elevated input costs and rapidly evolving technology — accurate and nuanced asset valuation is more critical than ever. NBV serves as a useful starting point but additional assessments should take place in order to capture the economic realities and future potential inherent in real-economy assets. By incorporating methodologies such as the income approach, considering highest and best use, maintenance, CAPEX and external market dynamics, dealmakers can gain a more complete understanding of asset value in the due diligence phase.
How PwC can help
As capital continues to flow toward tangible, inflation-hedged assets, adopting comprehensive valuation practices becomes crucial for making informed investment decisions and sustaining long-term success. PwC is here to help you navigate pricing complexities, identify value-creation opportunities and mitigate risks effectively.
Get started with PwC’s preference center
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