We’ve come a long way from Ibbotsons—but are we there yet?

BVWireIssue #50-1
November 1, 2006

The development of defensible discount and capitalization rates continues to bedevil business valuators.  Which data should you use: Ibbotson’s SBBI or Duff and Phelps’ Risk Premium Report—or both?  Or some other source—such as Fama/French data? (See BVWire 47-2).

And what about supply-side Equity Risk Premium—should you use it or not?  Why did the premium difference drop from 1.25% to 0.8%?  And growth rates: Should you use 0%, 3%, 6%--or more?  And as for Ibbotson’s industry risk premiums, a beta by any other database might not be as sweet—but also might not go far enough, alone, to carry the day in court.

For the answers to these and more on discount/cap rates, tune into top-notch panelists Gary Trugman, Jim Hitchner, Jim Alerding and Chris Mercer at the BVR telephone conference on November 8, 2006; to register, click here.

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