Kroll increases U.S. normalized risk-free rate to 3.0%
Kroll has increased its recommended normalized risk-free rate to 3.0% from 2.5%, effective April 7.
Global BV News: Eurozone ERP, risk-free rates unchanged: Kroll
Kroll has left unchanged (until further notice) its recommended German normalized risk-free rate of 1.5% and its current eurozone equity risk premium range of 5.5% to 6.0% (from a German investor’s perspective).
Twitter poll on the size effect
Wes Gray, a Ph.D., financial analyst, and CEO of Alpha Architect, recently conducted a poll on Twitter about the size effect (implicit in traded stocks where returns can be observed).
Global BV News: VAB6 review on IVSC website
A comprehensive review of Valuing a Business, 6th edition (VAB6) is on the website of the International Valuation Standards Council (IVSC), calling it a “foundational reference for business valuation education worldwide.”
Global BV News: Cost of capital parameters in Europe as of Dec. 31, 2021
ValueTrust has released the 9th edition of its “European Capital Market Study” that serves as a comprehensive compilation of capital market parameters such as cost of capital and implied as well as historical risk premiums for European countries.
Appraiser Uses Direct Way to Estimate Private-Company Cost of Equity
One appraiser, after 25 years and over 1,000 valuations of small owner-operated businesses, says that these firms bear no relation to public companies, so why look to the public markets for data when estimating cost of capital? Here’s the method he uses, which looks directly at the private capital markets and does not require any expensive resources.
Additional Takeaways From the 2021 ASA International Conference
Interesting sessions covering risk-free rates, equity risk premia, expert testimony, appraisal reviews, cannabis valuations, and more from the American Society of Appraisers’ International Conference, held in Las Vegas.
BV News and Trends March 2022
A monthly roundup of key developments of interest to business valuation experts.
Damodaran updates his implied ERP in wake of Ukraine invasion
In his blog post on how the crisis in Ukraine is playing out in the markets, Professor Aswath Damodaran (New York University Stern School of Business) updated his implied equity risk premium to 4.73% as of March 16, up from 4.24% at the start of 2022.
Global BV News: Reminder: Take a survey on ESG and valuation
The International Valuation Standards Council (IVSC) would like to hear from business valuation providers, users, and investors on the issue of environmental, social, and governance (ESG).
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.
Reminder: Pepperdine’s private cost of capital survey
Many valuation experts refer to the annual “Pepperdine Private Capital Markets Report” when estimating small private-company cost of capital.
Global BV News: IVSC launches survey on ESG and valuation
The International Valuation Standards Council (IVSC) would like to hear from business valuation providers, users, and investors on the issue of environmental, social, and governance (ESG).
Global BV News and Trends February 2022
Business valuation news from a global perspective.
Year-end 2021 data now in the Cost of Capital Professional
Year-end 2021 data, including equity risk premia, CRSP decile size premia, and industry betas/IRPs, are now available in BVR’s Cost of Capital Professional platform.
Damodaran posts second data update, explains implied ERP
An extensive amount of free data on risk-free rates, equity risk premiums (ERPs), corporate default spreads, corporate tax rates, country risk premiums, and more can be found on the website of Professor Aswath Damodaran (New York University Stern School of Business), who generously posts updates each year.
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.
Reminder: Pepperdine’s private cost of capital survey is now open
Forty percent of valuation experts use the annual “Pepperdine Private Capital Markets Report” for estimating small private-company cost of capital, according to a BVWire poll.
BV Year in Review 2021: End of an Era
A recap of significant new ideas and developments as reported in over 70 articles and hundreds of news items in the pages of Business Valuation Update during 2021.
Cost of Capital in Cross-Border Valuations
Join Carla Nunes and James P. Harrington, both of Kroll (formerly Duff & Phelps), for a presentation about developing cost of capital estimates for cross-border (i.e., international) valuations. This presentation includes a comprehensive case study along with a framework for cross-border valuations and common errors to avoid. Hear a discussion of models and data sources, and see the models in action.
This year’s Pepperdine private cost of capital survey is now open
Forty percent of valuation experts use the annual “Pepperdine Private Capital Markets Report” for estimating small private-company cost of capital, according to a BVWire poll.
Damodaran posts his data update for 2022
Each year, Professor Aswath Damodaran (New York University Stern School of Business) generously posts a great amount of data on his website that include risk-free rates, equity risk premiums (ERPs), corporate default spreads, corporate tax rates, country risk premiums, and other data—all of which are free.
Kroll reviews 2021 capital markets
“Capital Markets Insights—2021 Year in Review” offers a look at the past year in terms of notable S&P 500 performers, DJIA performers, M&A deals, PE deals, IPOs, SPACs, bankruptcies, cost of capital, and private markets.
Business Valuation Update Yearbook, 2022 Edition
January 2022 PDF (454 pages)
BVR (editor)
Business Valuation Resources, LLC
Items of Interest Gleaned From the ASA Conference Networking Ops
BV firm staffing troubles, Shannon Pratt’s video remarks about his new book, a new app for fractional interests, a heightened interest in businesses with a real estate component, and help needed in developing a new module for the Cost of Capital Navigator are just some of the things we learned outside the regular sessions at the ASA conference—in and around the exhibit hall and during the many networking breaks.