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BVResearch Pro adds another issue of the ASA’s BV Review

Among many other resources, the BVResearch Pro platform contains the full archive of the Business Valuation Review going back to 1982.

Double Backsolve Remains Unsupported

This article initially examines the mechanics of the established option pricing method (OPM) backsolve (OBS). It then quickly moves to a critical analysis of the more recently developed double backsolve (DBS) method, which certain practitioners have proposed as an alternative to OBS. We review the literature cited to support DBS and find it does not, in fact, support its use. In addition, we note some inconsistencies in the current use of DBS. We conclude that ...

The NICE Method Theory and Application

The Nonmarketable Investment Company Evaluation (NICE) Method, a valuation method under the Income Approach to value, determines the fair market value of noncontrolling equity interests in closely held investment entities such as family limited partnerships.1 In this paper I describe the theory of the method and the mechanics of its application in a valuation model. Recently, I have developed the Excel-based NICE-R Model, which is designed to be a transparent and user-friendly valuation tool.2 Finally ...

Recession tops Kroll’s 10 trends to watch in 2023

The new year “promises to be a tougher ride for most businesses, investors and consumers globally, but there is always opportunity in volatility,” according to the Kroll Institute in its latest report, “10 Trends to Watch Heading Into 2023.”

NFT Valuation: Pictures Worth Ten Thousand Dollars…or Not—Part 2

This webinar will take you through the non-fungible token (NFT) life cycle from minting to destruction, elucidate the four major types of NFTs, and identify valuation techniques and special considerations for valuing each type of NFT. It will also orient you on how to read NFT records and where to find key information for valuation purposes.

New Tool in the BV Toolbox—Incorporating Company Specific Risk in Option Pricing Models

The standard practice of accounting for company-specific risk is to leave expected cash flows unchanged and add a CRSP to the discount rate. A preferred methodology would be to adjust expected cash flows for the economic effect of company-specific risk and leave the discount rate unchanged. In this webinar, we will set forth the methodology for adjusting cash flows using a quant-based rather than a judgement-based methodology. We will then calculate call option value via ...

Most firms can’t forecast impacts of ESG

A new global survey highlights the difficulty in quantifying the financial impacts of environmental, social, and governance (ESG) factors.

Valuation Considerations in High Inflationary Environments

With inflation at its highest level since the Great Inflation, valuation analysts will have to consider macroeconomic factors that have not been present in the U.S. economy in over 20 years.

Accounting for Inflation in the Income Statement Forecast

An example from an actual engagement that demonstrates the manner in which inflation can impact a valuation.

How long will high inflation last?

The U.S. economy will be returning to a more normal level of inflation by late 2023 and heading into 2024, according to published research presented during a recent BVR webinar conducted by William Harris (Trugman Valuations).

Dealing with stubborn inflation in your valuations

With the CPI numbers coming in higher than expected, valuation experts will continue to grapple with how to assess the impact of inflation on their subject companies.

Another issue of the ASA’s journal added to BVResearch Pro

Every month, subscribers to the BVResearch Pro platform get access to new articles, books, court cases, webinar transcripts, and more that are added to the almost 20,000 pieces of content.

CFOs ignoring cyber risk despite huge losses

A Kroll report finds that 82% of the executives in its survey said their companies suffered a loss of 5% or more in their valuations following their largest cyber security incident in the previous 18 months.

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.

‘ESG Ratings: A Compass Without Direction’

That’s the title of a new paper out of the Stanford Graduate School of Business that examines the concerns over the reliability of the various ratings schemes for environmental, social, and governance (ESG) factors.

A ‘field guide’ to BV just released

Based on all of the questions business owners have asked them over the years, appraisers Casey Karlsen and Seth Webber of BerryDunn have put together a helpful book, A Field Guide to Business Valuation.

Nath comments on Hitchner v. Damodaran

The author of a number of seminal articles on control premiums, minority interest valuation issues, and cost of capital, Eric Nath (Eric Nath & Associates) comments on a recent article in Business Valuation Update.

Let's Get Real About the Dividend Growth Model

The dividend growth model, sometimes called the dividend discount model or discounted cash flow model, is a commonly used tool for estimating the cost of equity capital, particularly in the context of utility rate setting and unitary appraisal. Although the assumption of constant growth in perpetuity is almost never realistic, the constant growth version of the model is still commonly used in practice. However, given modern computing technology, there is no reason not to use ...

A Field Guide to Business Valuation

September 2022 PDF, Softcover (219 pages)

Casey Karlsen, Seth Webber

Business Valuation Resources, LLC

This is an ideal first book for people who want to learn how to perform valuations themselves. It does not contain all the details necessary to master the craft of business valuation but will serve as an excellent introduction to the topic.  Learn more >>

Damodaran on How Inflation Plays Out in Company Valuations

Professor Aswath Damodaran (New York University Stern School of Business) presents a simple framework for assessing the impacts of inflation on the value of a private company. He also made some explosive remarks about certain inputs to the cost of capital.

Financial advisor’s book of business is not a marital asset

In a Tennessee divorce case, an appellate court affirmed the judgment of the trial court that the husband’s book of business as a financial advisor for UBS is not a marital asset.

Put ESG impact in numerator, not denominator

Currently, there is no empirical evidence to support including the impact of environment, social, and governance (ESG) factors in the cost of capital, so it should be reflected in the cash flows.

Why Analysts Should Consider the Asset Approach for Going Concerns

Weston Kirk and Robert Reilly, who are both with Willamette Management, urge analysts not to reject the asset approach for going concerns automatically. And they stress (multiple times) that the asset approach is not the same as the cost approach.

Hitchner rebuts Damodaran’s attacks on cost of capital inputs

Just keep on doing what you’re doing with cost of capital, advises Jim Hitchner (Valuation Products and Services), despite what academics say.

Hitchner responds to Damodaran’s criticisms of cost of capital inputs

BVWire will attend a webinar tomorrow (July 21) by Jim Hitchner (Valuation Products and Services) who will respond to some severe criticisms Aswath Damodaran (New York University Stern School of Business) made during a recent BVR webinar.

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