Valuation in Times of High Inflation
Over the past year, inflation rates as measured by the U.S. Consumer Price Index have moderated but remain well above the Federal Reserve’s long-term target rate of 2%. The Federal Reserve continues to take measures to control the elevated levels of inflation by raising interest rates and tightening monetary policy. With elevated inflation levels and high interest rates, valuation analysts continue to be challenged with incorporating these macroeconomic trends into the valuation of closely held ...
Practical Considerations in Normalizing the Risk-Free Rate
Some valuation firms and practitioners have advocated that the risk-free rate of return (Rf) should be normalized when it is believed to be too low because of Federal Reserve Bank policies. Recent arguments for doing so have been based on technical economic analyses but have ignored practical aspects of normalizing Rf. This article is intended to address those practical considerations.
New Book Offers Template for Assessing ESG Impact on Firm Value
Based on some case studies, a new book includes a template that summarizes steps in assessing whether ESG factors are material enough to integrate into a valuation. The book is Valuation and Sustainability—A Guide to Include Environmental, Social, and Governance Data in Business Valuation, edited by Dejan Glavas (ESSCA, School of Management, Boulogne-Billancourt, France), who also wrote several chapters.
10 Short Takes From NACVA’s July Super Conference
There were top speakers, interesting sessions, and a good turnout (about 200) for the three-day NACVA Business Valuation & Financial Litigation Super Conference in person in Snowbird, Utah (and also online). Here are a few quick takeaways from some of the sessions we attended.
Global BVU News and Trends September 2023
Business valuation news from a global perspective.
Firms with better ESG ratings yield higher returns, per Kroll study
Companies with better environmental, social, and governance (ESG) ratings generally outperformed those with lower ratings over the 2013-to-2021 period, according to Kroll’s new ESG and Global Investor Returns Study.
Valuation to Maximize Client Engagement and Value
This transcript focuses on key issues involved in a properly executed and planned valuation and how such a process can maximize client engagement, value, and control.
BV News and Trends August 2023
A monthly roundup of key developments of interest to business valuation experts.
Global BVU News and Trends August 2023
Business valuation news from a global perspective.
Cost of Capital and Inflation Considerations
Inflationary times present unique challenges for businesses, investors, and valuation professionals. Understanding how inflation impacts the various methodologies as part of the valuation analysis and cost of capital components provides necessary insights into its impact on the final valuation. This webinar will also examine how inflation can affect various industries in distinctive ways and whether the purpose of valuation influences such analysis.
Adjusting WACC for ESG: ±100 basis points proposed
When assessing environmental, social, and governance (ESG) factors on valuation, unless there is an impact to cash flow, risk, or growth, ESG has no effect on business value.
New book on ESG and BV
Valuation and Sustainability—A Guide to Include Environmental, Social, and Governance Data in Business Valuation is a new book edited by Dejan Glavas (ESSCA, School of Management, Boulogne-Billancourt, France), who also wrote several chapters.
Global BV News: Damodaran updates his country risk analysis
“Country Risk: Determinants, Measures and Implications—The 2023 Edition” is the July 2023 update by Aswath Damodaran (New York University Stern School of Business) that includes equity risk premiums, by country.
Private Cost of Equity Up, Per 2023 Pepperdine Report
Private-company cost of equity is higher this year across nearly all categories, by about 5%, according to the 2023 Private Capital Markets Report. “This translates to an average of 25% this year, up from 20% last year,” says Dr. Craig R. Everett, the project’s director. The article also demonstrates how to use the report for developing private-company cost of capital.
Advanced Topics and Case Studies When Valuing Family Limited Partnerships and LLCs
As professional methodology has advanced and tax court cases have confirmed, employing analytical techniques to value family limited partnerships/LLCs using the income and market approaches allow appraisers to determine an accurate value objectively. Certain types of partnerships may be considered complicated. This webinar will focus on valuing more complex FLPs using case studies. Mr. Johnson will present empirical data that support the use of these objective appraisal methods and share his opinion on current issues ...
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.
BV News and Trends June 2023
A monthly roundup of key developments of interest to business valuation experts.
Global BVU News and Trends June 2023
Business valuation news from a global perspective.
Kroll lowers recommended ERP to 5.5%
Kroll has decreased its recommended U.S. equity risk premium (ERP) from 6.0% to 5.5% when developing USD-denominated discount rates as of June 8, 2023.
Global BV News: New edition of Valuation and Common Sense by Fernandez
The eighth edition of Valuation and Common Sense by Professor Pablo Fernandez (IESE Business School, University of Navarra) is now available—and it’s free if you click here.
Hitchner comments on new Pepperdine report
The 2023 Private Capital Markets Report has a “plethora of good information,” says Jim Hitchner (Financial Valuation Advisors) in the May issue of Hardball With Hitchner.
BV News and Trends May 2023
A monthly roundup of key developments of interest to business valuation experts.
Global BVU News and Trends May 2023
Business valuation news from a global perspective.
Cost of Capital Navigator now has a company-level beta module
Kroll has added a new module to its Cost of Capital Navigator that allows users to estimate their own industry CAPM betas by providing levered, unlevered, and relevered individual company betas.
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.