Global BV News: Cost of capital parameters in Europe as of Dec. 31, 2021

BVWireIssue #235-1
April 6, 2022

global business valuation
cost of capital, equity risk premium, international business valuation, international cost of capital, risk analysis, risk-free rate, multiple

ValueTrust has released the 9th edition of its “European Capital Market Study” that serves as a comprehensive compilation of capital market parameters such as cost of capital and implied as well as historical risk premiums for European countries. The study also includes trading multiples and total shareholder returns across a wide range of industries. Here are a few key findings:

  • The risk-free rate decreased from 0.33% as of June 30, 2021, to 0.09% as of Dec. 31, 2021;
  • The implied market return is at 7.5% as of Dec. 31, 2021, so, taking the risk-free rate of 0.09% into account, the implied market risk premium is 7.4%; and
  • The technology sector shows the highest trading multiples on average, followed by the healthcare sector; the financial sector continues to have the least expensive valuation level of all sectors.

The full report is available if you click here.

Please let us know if you have any comments about this article or enhancements you would like to see.