Implied Private Company Price Line Tool (IPCPL)
A contentious subject in business valuation is the cost of capital estimation of a small privately held business by using data from publicly traded equity securities. Using the traditional approach, different appraisers analyzing the same firm using the same data sources can easily arrive at vastly different cost of capital estimates. The Implied Private Company Pricing Line (IPCPL) approach is designed to eliminate the inherent problems in comparing public and private data and to add another approach in estimating the cost of capital for a privately held business.
"IPCPL represents a groundbreaking advance in valuation and should be a part of the curriculum of every valuation course. It has significant research potential with far reaching implications for pass through tax problems, company specific risk, capital structure decisions, and liquidity issues."
- Dr. Herbert Kierulff (Recently retired from Seattle Pacific University)
BVR's Private Company Cost of Capital Index from the Cost of Capital section of the Business Valuation Update
10 After-tax cost of capital (calibrated for 35% tax rate and mid-period convention) for average/typical risk company. For use on unlevered, after-tax expected free cash flows. Based on DealStats data and Dohmeyer, Burkert, Butler and Tatum’s Implied Private Company Pricing Line (IPCPL).
- IPCPL 2.11 Excel-based supporting models (updated quarterly)
- NEW! Regression documentation for IPCPL 2.1 models (updated annually)
- BUM WACC Calibrator (updated quarterly)
Learn more about the IPCPL tool
- Special Feature on The Implied Private Company Pricing Line/The Implied Private Company Pricing Model
- The Implied Private Company Pricing Line 2.0 K0 = (FCFF1/P) + g
- The Implied Private Company Pricing Model (IPCPM) K0 = (FCFF1/P) + g
- BV Community Reacts to New Cost of Capital Tool
- IPCPL Developers Field Queries on the New Model’s Underlying Data
- The Implied Private Company Pricing Line
- Utilizing the Implied Private Company Pricing Model: The Cost of Capital Wizard
- Frequently Asked Questions
- BUM WACC Calibrator Manual
- FAQs about the tool (PDF file)
- The Implied Private Company Pricing Line (November 7, 2013 webinar recording featuring Robert Dohmeyer and Rod Burkert