KPMG Germany offers updated cost of capital study—and database of IFRS impairment test WACC results

BVWire–UKIssue #9-2
December 17, 2019

cost of capital
beta, cost of capital, discount rate, international business valuation, risk-free rate, weighted average cost of capital (WACC), equity risk premium (ERP)

KPMG Germany collected WACC results from 312 companies in Germany, Austria, and Switzerland for its 14th edition of the ‘Cost of Capital Study,’ concluding that the average WACC across industries remains at 6.9%. This is the same result as the last four editions of the study, but authors Dr. Marc Castedello and Stefan Schöniger (partners at KPMG AG Deal Advisory) express concern that this might be the ‘calm before the storm’ of regulatory interventions, scarcity of resources, climate change, further digitalisation of business models, and, of course, Brexit and the US-China scheme.

KPMG also makes WACC data available (for 150 countries) via their Valuation Data Source service.

Some further highlights of their new report:

  • After an increase last year, the average risk-free rate remains nearly constant, at 1.2%—until recent months;
  • The average market risk premium remains stable, at 6.5%;
  • The highest unlevered beta factors were applied by the automotive and technology sectors; and
  • The average cost of debt increased 0.1%, to 2.9%.
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