Business Valuation Update
- How to Review a Report’s Valuation Methodology
- Ideas for Solving Two Problems in the BV Profession
- How Do Your Firm’s Benefits Stack Up?
- Using Rule of Thumb Data to Uncover Cooked Books
Comparing the Butler-Pinkerton Model to Traditional Methods Under Four Daubert Criteria
Over the last two years, the authors have developed a new, empirical technique for quantifying company-specific risk (CSR). The Butler Pinkerton Model (BPM) quantifies company-specific risk premiums (CSRPs) for publicly-traded benchmarks using the follow ...
Key Points From Hitchner’s Annual BV Update
A recap of Jim Hitchner’s look at the major issues in BV over the past year, including long-term growth rates, the three-stage DCF, normalizing the risk-free rate, cost of capital, plagiarism, lack of liquidity on a 100% interest, and more.
Determining a Distressed Debtor Company Discount Rate (Part 2)
The cost of capital represents the required return that must be earned if the value of the entity at issue is to remain unchanged. Cash flows are discounted at the cost of capital to determine the value of the emerging entity. A debtor company’s capital ...
BVU Profiles: Pablo Fernandez - More Common Sense—Less Theory and Models—Needed in Business Valuation
Pablo Fernandez is a professor in the department of financial management at the University of Navarra—IESE Business School in Spain (ranked No. 5 in the world for full-time MBAs). A widely published author, he conducts a survey of market risk premiums and ...
Valuing Shareholder Loans in Divorce: What Is It Worth?
After a shareholder loan has been deemed to be a bona fide debt of the company, payable to the shareholder, the valuation analyst has yet another task: determining the fair market value of that debt.
Hitchner v. Damodaran on Inputs to the Cost of Capital
Jim Hitchner (Valuation Products and Services) responds to some severe criticisms Aswath Damodaran (New York University Stern School of Business) made during a BVR webinar about certain inputs to the cost of capital. Hitchner also offers some best practices and a handy tool to use as a reasonableness check on your cost of capital estimate.
BV News At-a-Glance
A monthly roundup of key developments from the standard setters, regulators, and valuation professional organizations (VPOs), plus noteworthy new books, research papers, and studies of interest to business valuation experts.
BVU News and Trends February 2021
A monthly roundup of key developments of interest to business valuation experts.
New Pepperdine Report Creates Buzz at the NACVA Conference
One of the more well-attended sessions at the Business Valuation & Financial Litigation Super Conference hosted by the National Association of Certified Valuators and Analysts (NACVA) was a session Dr. Craig R. Everett conducted. He is the project director of the Private Capital Markets Project from Pepperdine University, which does an ongoing survey of expected rates of return of providers in the private capital market.
Market Multiple Adjustments: Get a Grip on GRP
A follow-up of an earlier article that focuses on the attributes of growth, risk, and profitability (GRP) in a benchmark analysis of guideline companies.
Duff & Phelps Decreases U.S. ERP Recommendation to 5.5% as of January 15
Duff & Phelps regularly reviews fluctuations in global economic and financial conditions that warrant periodic reassessments of the equity risk premium (ERP). Based upon current market conditions, Duff & Phelps is decreasing its U.S. ERP recommendation to ...
Systemic Methodology Calculates Size Premiums
Building on the recent equity risk premium study we presented (BVU, Nov. 2005) and one of our latest telephone conferences (Top Controversies in Determining Cost of Capital, Feb. 1, 2006), this article offers a new method to ‘smooth over’ the debate on a ...
Expanding the Cost of Capital Horizon Beyond CAPM
We will see many advances in estimating the cost of capital in future years, as it is still relatively unknown how risk is priced. That was one of the messages of two interesting sessions on cost of capital at the recent NACVA annual conference in San Die ...
The New Duff & Phelps Cost of Capital Navigator—(Some of) Your Questions Answered!
Responses to audience questions during the first public demo of the Duff & Phelps online Cost of Capital Navigator, which will replace the print versions of the Valuation Handbook series.
Review of Surveys on Cost of Capital Data Sources and Inputs
The Kroll Cost of Capital Navigator continues to be widely used and accepted for estimating cost of equity (COE). But BVR’s Cost of Capital Professional has been gaining considerable steam since its launch in 2018, according to a BVR survey. Some other resources for estimating the cost of capital have also seen an uptick in usage.
Getting Your Head Out of the Model: Valuing a Multinational Company
Editor’s note: There is little guidance on the valuation of multinational companies. There are models that can be used, but they should not be used blindly. The inputs to the models must be carefully considered because there is no one-size-fits-all method ...
BV Year in Review 2023: Recruiting Push
The business valuation profession continued to thrive in 2023 amid ongoing challenges, such as how to reflect uncertainty, inflation, and market volatility in valuations. But another issue loomed large in the profession: attracting and retaining new young talent.
Global BVU News and Trends April 2020
Business valuation news from a global perspective.
Using a Discounted Cash Flow Methodology in Uncertain Times
A fundamental look at the method taking center stage during the pandemic. This article outlines how the DCF method works and to highlight the nuances and trap doors that will be encountered and must be overcome to reliably apply the method to derive an indication of value that is well reasoned and supportable for the application intended.
Insights From the Record-Breaking ASA Fair Value Conference
A huge audience listened to top speakers discuss current issues, company-specific risk, technology assets, preferred equity, inventory, and a regulatory update.
BV News and Trends March 2022
A monthly roundup of key developments of interest to business valuation experts.
BVU News and Trends October 2019
A monthly roundup of key developments of interest to business valuation experts.
Using Jensen’s Alpha to Separate Active and Passive Appreciation
The author presents an alternate approach (Jensen’s alpha) to segregating passive from active increases in the value of a marital asset. An example is presented of an automobile dealer.
BVU News and Trends May 2020
A monthly roundup of key developments of interest to business valuation experts.
The binomial lattice option-pricing model for valuing American-type employee stock options Part 2
This part 2 of this article starts with a comparison of the binomial lattice model with the Black-Scholes model. The balance of the article is an example of the application of the binomial lattice model to American-type call options. Also discussed are th ...