The Black-Scholes Model Can Overvalue ESOs and Other Options

Business Valuation UpdateVol. 21 No. 11
November 2015
Martin Greene, CPA/ABV, ASA

Summary

The Black-Scholes model (BSM) is one of the most common formulas used in business valuation today. It is often used to value employee stock options and junior rounds of equity. Moreover, accounting guidance issued by the Financial Accounting Standards Boa ...