Update on guidance regarding the company-specific risk premium
Expect to see an exposure draft of guidance on the company-specific risk premium during the first half of 2024, reported Christopher Armstrong (KPMG), at the winter edition of the ASA’s Fair Value Conference last week.
BV 2023, Year in Review: Top 10 List
The year 2023 was full of change. How have high interest rates and market volatility impacted the cost of capital and minority discounts? What were some of the top cases impacting business valuation? What does the new lease accounting standard mean for valuations? What has changed in tax regulation? In this webinar, we highlight 10 major topics that impacted business valuation in 2023 and discuss implications to valuators in the upcoming year.
Feedback Wanted on New Model for Small Firm Risk
A variation of the multiattribute utility model (MUM) used along with Monte Carlo simulation forms the basis of a new model for estimating a company-specific risk premium (CSRP) for small, closely held businesses. Excel templates are available from the model’s developer, David Goodman (Jesson, Oslin & Associates), and feedback is welcome.
BV News and Trends February 2023
A monthly roundup of key developments of interest to business valuation experts.
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 ...
Firm nimbleness as a measure of risk
Investors perceive firms with higher levels of inflexibility, such as not being able to scale operations or adapt to changes in profitability, as being riskier and have a higher implied cost of equity, researchers conclude in a new paper.
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 ...
BV News and Trends September 2022
A monthly roundup of key developments of interest to business valuation experts.
BV News and Trends August 2022
A monthly roundup of key developments of interest to business valuation experts.
Trugman’s Approach to Assessing Company-Specific Risk
This is an excerpt from the new sixth edition of Understanding Business Valuation, which has a companion website that includes a good selection of full sample valuation reports and other supporting material.
Comment on COE data sources survey
In last week’s issue, we reported on a survey of the data sources analysts use to estimate the cost of equity (COE) (click here to see the news item).
Reminder: Feedback wanted on company-level beta module for the Navigator
Kroll (formerly Duff & Phelps) is developing a new module for its Cost of Capital Navigator that will enable users to derive company-level betas based on their own selection of comparable companies.
Feedback wanted on company-level beta module for the Navigator
Kroll (formerly Duff & Phelps) is developing a new module for its Cost of Capital Navigator that will enable users to derive company-level betas based on their own selection of comparable companies.
BV News and Trends October 2021
A monthly roundup of key developments of interest to business valuation experts.
Measuring, Documenting, and Defending the Company-Specific Equity Risk Premium Selection
Join Robert Reilly and Connor Thurman for a dive into the theoretical basis for including a company-specific equity risk premium (CSRP) in the analyst’s cost of equity capital measurement analysis. Learn about measurement procedures and documentation procedures that the analyst may need to perform in the CSRP selection analysis. Also attendees will receive guidance to aid the analyst in the defense of the CSRP selection in a litigation context. Get the best practices you need ...
BV News and Trends September 2021
A monthly roundup of key developments of interest to business valuation experts.
Input Needed to Develop New Guidance on Company-Specific Risk
This is an update on new guidance being developed by The Appraisal Foundation’s Business Valuation Resources Panel’s Work Group on Company-Specific Risk Premia (CSRP). It needs input from practitioners on this topic.
BV News and Trends August 2021
A monthly roundup of key developments of interest to business valuation experts.
New paper on CEO tenure and firm value
If you’re valuing a business with a CEO who has been in that job for 20 years, is that a positive or a negative?
CSRP working group needs input
The Appraisal Foundation’s Business Valuation Resources Panel’s Work Group on Company-Specific Risk Premia (CSRP) is seeking input via survey to understand how valuation practitioners address such premia within their valuations.
Reminder: Please take a survey about company-specific risk
BVWire is pleased to present a survey by The Appraisal Foundation’s Business Valuation Resources Panel’s Work Group on Company-Specific Risk Premia to understand how valuation practitioners address such premia within their valuations.
Reminder: Please take a survey about company-specific risk
BVWire is pleased to present a survey by The Appraisal Foundation’s Business Valuation Resources Panel’s Work Group on Company-Specific Risk Premia to understand how valuation practitioners address such premia within their valuations.
Please take a survey about company-specific risk
BVWire is pleased to present a survey by The Appraisal Foundation’s Business Valuation Resources Panel’s Work Group on Company-Specific Risk Premia to understand how valuation practitioners address such premia within their valuations.
Age- and gender-specific risk? A new paper says it exists
We’d like to be a fly on the wall the first time a valuation expert testifies that his or her company-specific risk factor was adjusted for the age and gender of the subject firm’s top managers.
The Balance Sheet and its Correlation to Company Specific Risk
The pandemic is teaching us that businesses, small and large, and their balance sheets are important not just from handling a pandemic, but also from sustaining operations. Understanding assets, and which matter, will help analysts determine the specific company risks. Expert Josh Shilts discusses which categories are important in understanding risk and what ratios and other analyses can be used to measure risk. Identifying and linking balance sheet financials to company-specific risk is a critical ...