Business valuation experts will soon have an additional option for estimating the cost of equity. In early November, BVR will release an additional resource for the profession: a new cost of capital platform that will initially be available for free to all practitioners. The new platform supports the build-up method and CAPM calculations for any valuation date. BVR’s intent is to provide a simple, independent service to augment each appraiser’s own judgment and their other cost of capital research.

Back to basics: Business Valuation Update interviewed two of the individuals involved in the development of the new platform. Dr. Michael Crain has been a practitioner for over 30 years and is also a faculty member at Florida Atlantic University and director of FAU’s Center for Forensic Accounting. Ronald L. Seigneur is a veteran valuation expert and is managing partner of Seigneur Gustafson LLP CPAs, based in Lakewood, Colo. In the interview, they explain that the process of estimating the cost of equity has become too much of a complex “black box” of applied mathematics, which gives an “illusion of precision” that moves experts away from using professional judgment and common sense.

The new platform uses a time-tested fundamental approach steeped in academics that does not steer the expert into “using the opinions of the provider which may not have any independent academic basis.” In addition to Crain and Seigneur, an advisory board of independent professionals experienced in the cost of capital will oversee the new platform. The full interview is available as a free download and is available if you click here.

Free trial: BVR is looking for user feedback during the free launch period (using CRSP market return data up to Sept. 30, 2018) that will start in early November. Later, the platform will be available with a subscription and will contain FY2018 data and beyond. New data will be added in March 2019.

In the coming months, BVWire will provide more information on the details of the new platform and the thinking behind it. In the meantime, BVR has set up a special webpage with more information and how to sign up for the free trial at www.bvresources.com/COCplatform.