Should appraisers be guessing on company-specific risk?


Of all the components that make up the cost of equity (COE), the company-specific risk premium (CSRP) often has the biggest impact on your discount rate. And, while appraisers rely on hard data for all of the other inputs in the COE, the CSRP is more or less a guess—which can send your business valuation off course.

A great example of this can be seen when you compare the CSRPs for Facebook, Amazon, Netflix, and Google using the Butler Pinkerton Calculator to account for their unique risk factors. Download our infographic that presents an empirical analysis of each company’s CSRP. The results may surprise you!

CSRPs using Butler Pinkerton Calculator - Infographic


Categories