Quantifying the company-specific risk premium

BVWireIssue #54-1
March 7, 2007

Historically, BV experts have relied on subjective assessments or “rules of thumb” regarding the appropriate company-specific risk premium (CSRP) to apply in their analyses of private entities.  But now, in a first among BV analysts, Peter Butler and Keith Pinkerton (both of Hooper Cornell, Boise) have explicitly quantified the CSRP for publicly traded comparable companies, for use as a reference point in selecting more appropriate, less subjective CSRPs for privately held companies.  Noted NYU Professor Aswath Damodaran approves the analysts’ “total beta” concept, “as I should, since it was a concoction of mine...”

To hear all three experts discuss and dissect this new CSRP methodology, be sure to register for BVR’s telephone conference tomorrow (March 8, 2007) by clicking here.

For a free copy of the author’s recent BVU article by Pinkerton and Butler, “Quantifying CSRP: A New, Empirical Framework with Practical Applications,” click here.

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