The Implied Private Company Pricing Line (IPCPL) is a new approach designed to eliminate the inherent problems in comparing public and private data and to be more reliable in estimating the cost of capital for a privately held business. After it was featured in the September issue of Business Valuation Update, readers sent some very positive feedback.
For example: “The article on the private company pricing is extremely valuable to valuation professionals,” says Charles Grigsby (Grigsby Forensics & Valuation). “I have used the Butler-Pinkerton Calculator to achieve an objective determination of company specific risk as opposed to a subjective determination. The IPCPL is another objective determination (Butler is one of the authors) in achieving an objective determination of the cost of capital for a private company with sales lower than $50 million. The three authors of this article [Bob Dohmeyer (Dohmeyer Valuation Corp), Pete Butler (Valtrend LLC), and Rod Burkert (Burkert Valuation Advisors)] are among the best in the country and their research and resulting methodology is critical for application by all valuation analysts to achieve this objectivity.”
There are also a few good discussions surrounding the IPCPL model in the BVR LinkedIn group. One of the comments mentions that BVR has posted the article on its website as a free download.
Learn more: BVR will present a webinar, The Implied Private Company Pricing Line, on November 7 with Dohmeyer and Burkert, who will explain their new approach to cost of capital estimation for private businesses.