• “Valuation Expert Gets Caught Up in a Plagiarism Nightmare” (BVR Editor). A valuation expert in a divorce case was discredited over some material in his report that was copied from outside sources without attribution. With the proliferation of data and research on the web, it is easy to inadvertently use something and then forget to add the attribution.

• “NICE DLOM Method for FLPs Gets Peer Reviewed” (BVR Editor). A paper describing the theory and mechanics of the nonmarketable investment company evaluation (NICE) method for estimating a discount for lack of marketability (DLOM) has been published in the Business Valuation Review,the peer-reviewed journal of the American Society of Appraisers.

• “A Model for Forecasting a Multiple-Location, Growing Business” (BVR Editor). Veteran valuation expert Gary Trugman (Trugman Valuation) had an engagement that involved a business that operated a franchise with multiple locations—and was required to open a lot more. This article shows in detail how he did the forecasting.

• “Considerations When Adding Litigation Services to a Valuation Practice” (BVR Editor). The 2022 AAML/BVR National Divorce Conference sparked some advice for moving your practice into litigation support services for marital dissolution or any other matters that are headed to court.

• “More Insights From Young BVers About the Profession” (BVR Editor). The second of two panel discussions with young valuation and forensics experts reveal additional insights on their perspectives on the profession, including what attracted them to the profession and why they stay in it.

• “Simple Idea to Help Business Sellers Get All They Deserve” (BVR Editor). A valuation expert had a client who wanted to sell his company but had an unrealistic idea about price. The expert used DealStats to create a compelling visual that saved the deal from falling apart.

Check out the March 2023 issue of Business Valuation Update.

Any business valuer using the income approach will be heartened to hear that most of the main cost of capital data providers are producing similar cost of equity estimates as 2023 begins. In a head-to-head test, Kroll’s Navigator, BVR’s Cost of Capital Professional, and the Pepperdine survey produced similar cost of equity results. See this article in the February 2023 issue of Business Valuation Update.

Year-end 2022 data, including equity risk premia, CRSP decile size premia, and industry betas/IRPs, are now available in BVR’s Cost of Capital Professional “common sense” platform. The goal of CCPro is to avoid “black box” of applied mathematics with transparent support for both the buildup method and CAPM calculations for any valuation date. It also gives you the flexibility to choose the start year for historical return data based on what segment of history you believe best offers a reasonable basis to make estimates of expected future returns. For a personalized demo of the platform, click here.

The application of control premia can be the most influential factor in many business valuations. No wonder—the new dataset covered in the just-released “4Q 2022 Control Premium Study” includes premia for non-U.S. transactions ranging from -86% to 414%. The new report is now available free to subscribers of the FactSet Mergerstat/BVR Control Premium Study platform. Login to your “My BVR” page to download the report.

Fortunately, the average control premia internationally is hovering near the 30% figure familiar to most UK analysts, despite all of the new UK regulations and governance changes.

The issue highlights control premium and minority discount data as of the fourth quarter of 2022 and includes charts and graphs that provide analysis on equity control premiums, minority discounts on equity, and the invested capital control premium by industry sector, percentage acquired, deal size, strategic and financial buyer breakouts, method of payment, transaction multiples, and many more.

Aswath Damodaran has just completed his annual report on country-by-country risk. BVR and many financial experts use this analysis to assess country risk premia. In the table below, Damodaran summarises the factors that determine country risk (his full analysis of these determinants appears in the new SSRN paper).

Experts can refer to the table below to help explain how they considered each of the risk factors in assessing value for business assets located outside of the UK.

BVWire—UK follows a number of UK and European transaction indices to track investment valuations and deal multiples. Usually, despite the daily financial crises reported by the media, the multiples reflect longer-term trends—in keeping with business valuation standards. This is true for the new Q4 2022 Mid-Market Argos Index®, measuring the level of private midmarket company valuations every quarter in the eurozone. Though the big-name investment banks have generally declared 2022 to be a disaster, from a valuation point of view, little changed in the fundamental economics of SME assets. The index showed a limited decline to 9.9x EBITDA despite turbulent market conditions.

Carried out since 2006 by Epsilon Research for Argos Soditic, the index is calculated based on the information contained in the Epsilon Multiple Analysis Tool.

24 February: Discount Rates in a High Inflationary Environment, ICAEW webinar, 13:00

22 March: Society of Shares & Business Valuers’: Jim Harrington and Carla Nunes on Size Premia in the UK, 17:30 BT. Register at ssbvmemsec@outlook.com

30 March: BVIUK Fiscal Valuation With Andrew Strickland, virtual, 17:30

11 April: ICAEW Practical Business Valuation, four days, virtual classroom (repeated 21 June)

27 April: BVUIK SaaS-Sy Valuations: How to Confidently Approach the Valuation of Software-Enabled Businesses With Mike Blake, virtual, 17:30

1-2 June: ICAEW Advanced Valuation Techniques, two days, virtual classroom

20-21 September: ICAEW Valuation Conference, virtual, details to follow

Want to share a news item? Have feedback or comments? Please contact David Foster at ukeditor@bvresources.com.

Want to share a news item? Have feedback or comments? Please contact
David Foster at ukeditor@bvresources.com.