What equity risk and size premia are you now using?


Here's some current benchmark data from John Paglia and Robert Slee.  As part of their current Pepperdine Private Capital Markets Project survey, they also asked appraisers what equity risk premia, size premia, company specific risk factors, and risk-free rates they are now using.   Again, after all the commentary on how to handle recent volatility (much of it reported by BVWire), here are the averages (note:--these are mean, not median, averages).

Market (Equity) Risk Premium 7.4%
Size premium for private company with $250M in revenues 3.1%
Size premium for private company with $25M in revenues 5.0%
Size premium for private company with $1M in revenues 6.9%
Average company specific risk premium for private company with $250M in revenues 2.5%
Average company specific risk premium for private company with $25M in revenues 4.3%
Average company specific risk premium for private company with $1M in revenues 6.4%
Industry risk premium for typical manufacturing company 3.4%
Industry risk premium for typical service company 3.4%
Risk-free rate 4.9%

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