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
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.
Feedback wanted on ‘social value’
The Social Value Working Group at the International Valuation Standards Council has released its second paper in a series that examines whether “social value” can be a basis of value, the difference between social value and the social component of ESG, and whether the existing valuation principle of highest and best use can apply to social assets and social value.
Butler comments on Damodaran’s ‘dynamite’ remarks regarding COE
Last weeks’ issue covered some very choice words (some of which we can’t print here) Aswath Damodaran (New York University Stern School of Business) made about various inputs some analysts use to determine the cost of equity (COE).
Damodaran tosses some dynamite during BVR webinar
Historical equity risk premium? “I don’t like a backward-looking and stagnant premium.”
Long-term inflation estimates rise, per Kroll infographic
Long-term inflation expectations for the U.S. and Germany, a key starting point to evaluate the long-term growth rate used in the terminal year of DCF analyses, are significantly higher when compared to June 2020, at the height of the COVID-19 crisis, according to a newly updated infographic from Kroll.
Valuation amid inflation: a free interactive webinar with Aswath Damodaran
BVR has a very special event next week—a free one-hour webinar on June 14 titled In Search of a Steady State: Inflation, Interest Rates, and Value—The (Inflation) Genie Escapes the Bottle!
How Direct Loan Market Participants Are Handling the Handoff From LIBOR to SOFR
The transition from the London interbank offered rate (LIBOR) to the secured overnight fund rate (SOFR) will continue to present challenges for private lenders and their operating and valuation teams as long as loan portfolios have a mix of LIBOR- and SOFR-based deals and as long as there are numerical differences between term SOFR and term LIBOR. The author is chairman of Valuation Research Corp. and head of its portfolio securities valuation practice.
Reconciling the Results of Various Valuation Methodologies
This is an excerpt from the author’s new sixth edition of Understanding Business Valuation. It illustrates the clear, simple way he explains key concepts and provides real-world examples.
Three special BVR workshops in May: energy, estate/gift, and intangibles
The month of May will see BVR webcast three special events.