Second issue of Willamette’s Perspectives is released
The second issue of a new quarterly digital publication from Willamette Management Associates, Perspectives, has been released, and you can access it if you click here.
Excel: Tips and Tricks for BV Professionals
Participants will learn tools for working in Microsoft Excel specifically designed to improve overall efficiency when building and working with valuation models. Techniques and tips will be based on the presenter’s more than 20 years of experience with building models and working with Excel for valuations both domestically and internationally. Insights will help reduce the use of the mouse and improve the use of the keyboard when modeling. Participants will learn how to custom format ...
Damodaran Continues His Explosive Remarks About ESG
At the ASA Spring Fair Value Conference in New York City on May 4, we did not expect to hear any glowing words about the environmental, social, and governance (ESG) movement from Professor Aswath Damodaran (New York University Stern School of Business). In his blog, he has been very vocal in his strong criticisms of ESG as a “weapon of mass distraction” and a “gravy train” for consultants, investment managers, scoring/ratings providers, and those pushing for more disclosures.
First issue of Willamette’s Perspectives is released
A new digital publication, Perspectives, which will be a quarterly, has replaced Willamette Management Associates’ Insights publication.
A Look Back: Including ESG in Valuation Models
Quantified the impact of environmental, social, and governance (ESG) factors and measuring their effects is not a new phenomenon. Thanks to the BVResearch Pro platform, here are two ways experts have done this before.
Using Regression Analysis in Business Valuation
As valuation analysts, we often analyze how one or more variables explain the behavior of another variable such as revenues or trends in market multiples. We are also tasked with analyzing trends in data over time to be used as a basis for a forecast of future expected results. A tool that helps us analyze the relationships between variables is linear regression. Linear regression models can be useful tools in analyzing relationships between economic and ...
New Excel Add-In: Incorporate Guideline Public Company Data Seamlessly
Join the Value Analytics team for a deep dive into the Value Analytics Excel plug-in. This demo will provide an overview of the plug-in functionality and supporting documentation. Proprietary templates are introduced to facilitate analysis for users. Find out how to access public-company data at an affordable price ...
Determining Reasonable Compensation + an RCReports Case Study
This session explains the accepted methodologies for normalizing owner compensation in business valuations. The cost, market, and income approaches will be explained with examples. Demonstrations of RCReports software will show how to obtain compensation data for each approach. Practical tips and recommendations for improving efficiencies, documenting analyses, and avoiding common mistakes will also be provided.
Damodaran to give critical perspective of ESG
Never one to mince words, Aswath Damodaran (New York University Stern School of Business) called it “the most overhyped, oversold concept in the history of business.”
Is Expected Inflation the Best Long-term Sustainable Growth Rate?
When using the income approach to value a business, selecting a sustainable long-term growth rate is a necessary input into the valuation model, one that can have a material effect on the value of the business. The business valuation literature has provided little guidance for estimating and understanding sustainable long-term growth rates. Apart from relying on macroeconomic indicators and historical industry averages, appraisers have few options for selecting sustainable long-term growth rates and are often ...
Long-run Growth Rates in Discounted Cash Flow Models
Long-run growth rates play a central role in all discounted cash flow models. This is true whether the goal is to estimate the value of a company or to estimate the cost of equity. It is well recognized as a matter of mathematics—although not always incorporated into practice—that the long-run expected growth rate cannot exceed the growth rate of the aggregate economy. What is less widely appreciated is that as an empirical matter the long-run ...
Adjusting Tech Company Financial Statements When Applying the Value Driver Formula
This article follows the authors' article in Business Valuation Review (November 2020) that explored typical errors when capitalizing cash flows in the terminal period of the Discounted Cash Flow Method. Since investments related to intangible assets are often expensed immediately through the income statement under generally accepted accounting principles, the article demonstrated that without significant adjustment, the value driver formula would likely overstate the net reinvestment into fixed assets and working capital when calculating the ...
Unlocking the Value of ESG: Report from the International Valuation Standard Council
This report provides an overview of the work carried out by the International Valuation Standard Council (IVSC) over the past two years in relation to unlocking the value of environmental, social, and governance (ESG) criteria within the valuation process, including a summary of the recently published IVSC ESG perspectives papers and internally generated intangibles. The report also illustrates some key findings from the IVSC ESG survey for firms, investors, and valuation providers and advises when ...
SEC climate proposal is key topic during KPMG panel
At the recent Global Financial Reporting and Valuation Conference, a panel of KPMG leaders shared their knowledge and insights on the evolving landscape regarding environmental, social, and governance (ESG) factors. During this session, audience members were particularly interested in how the SEC climate proposal can impact private companies.
Bickering BV thought leaders: What to think?
How often do we hear well-known, veteran valuation experts “vehemently” disagreeing with each other over various issues?
The Use of Monte Carlo in Valuation
Participants will understand the origins of Monte Carlo, as well as learn basic applications for use in the real world. The webinar will cover basic statistics and mathematics required to understand how Monte Carlo simulations are performed, including discussing the central limit theorem and the law of large numbers. The participant will learn how to model stochastic equity/asset processes for use in option pricing and contingent consideration valuations. The participant will learn basic Excel functions ...
A Hybrid Approach to Determining Company-Specific Risk
This webinar will first explain the theoretical reasoning as to why a company-specific risk premium is necessary for a small business when using the buildup method to estimate the cost of capital. I will then present a hybrid approach using the multiattribute utility model to quantify the company-specific risk premium. Finally, I will show how to incorporate Monte Carlo simulation into the model to determine the range of potential company-specific risk premium. Attendees will have ...
Final issue of Willamette’s Insights focuses on best practices
The Winter 2023 issue will be the final one for Insights from Willamette Management Associates.
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.