Big news on Morningstar/Ibbotson valuation data

BVWireIssue #132-3
September 25, 2013

Morningstar announced late last week that it no longer will support the valuation products in the Cost of Capital Resource Center. This includes the Ibbotson® SBBI® Valuation Yearbook, Cost of Capital Yearbook, individual company beta tear sheets, individual industry cost of capital tear sheets (by SIC code), and the three international cost of capital reports. Some of this information will be added to the SBBI classic edition—but reportedly not the elements most heavily used by appraisers.

The Valuation Yearbook is the single most-used tool in the profession, and most appraisers consult this group of products regularly for size premia, industry risk premia, industry betas and market multiples, and international cost of capital data—and the all-important cost of capital figures for smaller businesses provided by the 10th decile splits (10a and 10b, plus 10w, 10x, 10y, and 10z).  As we understand it, all of these crucial size premia and other datapoints, which are critical tools for the profession, will no longer be offered by Morningstar going forward.

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