Total Beta and BPM concepts stand up to serious scrutiny

BVWireIssue #80-2
May 14, 2009

Experienced business appraisers and representatives from the academic community weigh in on the merits of the Butler Pinkerton Model (BPM) for calculating company-specific risk, in the article, A Total Repudiation of Mr. Kasper’s Critique of the Butler Pinkerton Model, by Peter Butler and Keith Pinkerton and in a piece entitled Academic Commentary on Winter 2008 BVReview Article by Vincent Covrig and Dan McConaughy.

The piece—which analyzes a “critique” of the BPM in the Business Valuation Review—also illustrates that the BPM and Total Beta concepts can withstand serious scrutiny. More importantly, the authors challenge the valuation community to compare the relative merits of Total Beta and the BPM Calculator against any existing cost of capital databases, which do not empirically capture total risk. Better yet, put Total Beta and the BPM to work and judge for yourself!

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