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BVU News and Trends January 2021

A monthly roundup of key developments of interest to business valuation experts.

Prospects grow for valuing promissory notes, says Mercer

There is an increasing number of opportunities for analysts in valuing promissory notes, says Chris Mercer (Mercer Capital) during the recent AICPA Forensic & Valuation Services Conference.

School of Probability: The Use of Monte Carlo in Valuation

The one thing we know about valuations is that the future is unpredictable. How we deal with that uncertainty is critical to developing credible valuations. Join Oksana Westerbeke and Keith Konen to learn how Monte Carlo simulations can be used to deal with the uncertainty, allowing you to generate insights for your client and build credible valuations.

The Valuation of Convertible Notes Using a Binomial Model

The authors’ research reveals that there are numerous articles, chapters, and models with bad math, bad equations, notational errors, or undisclosed rounding in some equations. They present a version of the Goldman Sachs binomial model and suggest that valuators provide fully functional binomial models when requested so that reviewers can “look under the valuator’s hood.”

Global BVU News and Trends July 2020

Business valuation news from a global perspective.

New twist on valuing small promissory notes

For the past few years, Bruce Johnson (Munroe, Park & Johnson Inc.) has been using data from business development corporations (BDCs) to develop a base rate of interest for small (under $10 million) privately held promissory notes, he explained during a recent webinar.

Will COVID-19 open up the PIPES market in the UK? Baker MacKenzie say yes.

Private investments in public equities (PIPES) are a little-used financing alternative in the UK, but a new article by Baker MacKenzie London partners Nick Bryans and James Thompson in this month’s International Financial Law Review (IFLR) suggests that need may outweigh the huge cultural and regulatory hurdles.

Houlihan Lokey anticipates increase in distressed loan valuations

The ‘coronavirus-triggered economic downturn could lead to many performing loans to become distressed, especially for highly-leveraged companies,’ says a new client advisory from Houlihan Lokey, the global investment bank and valuation firm.

Shares and Assets Valuation Fiscal Forum requests agenda topics for February meeting

The next SAV Fiscal Forum will be held on Tuesday, 25 February 2020, commencing at 1 p.m.

Private debt is now available for smaller UK companies ‘overlooked’ by clearing banks, BDO says

Steve Carr, corporate finance director for debt advisory of BDO London, commented in a client communication last month that BDO has ‘witnessed lots of instances where debt funds have provided solutions that clearing banks have been unable to match (albeit this comes at a price).’

Inclusion of Betas in CCPro Platform Puts the Spotlight on the IRP

Two sources of industry betas are now included in BVR’s Cost of Capital Professional (CCPro) to help in estimating the industry risk premium (IRP) component of the buildup method for developing the cost of capital for a private company. For appraisers that choose to use an IRP, care must be taken and there are some important factors to consider.

Determining the FMV of Small Privately Held Promissory Notes

The appraisal of promissory notes is an area of business valuation that has not received much attention from academic journals. Appraisers are taught to use corporate bonds as comparable investments, but they are much too large and marketable to be used as a proxy for most privately held promissory notes. This article introduces the concept of using Business Development Company (BDC) rates to value small promissory notes.

BVU News and Trends February 2019

A monthly roundup of key developments of interest to business valuation experts.

Thinking of doing complex financial valuations?

Want to move from standard business appraisals to valuations of derivatives, guarantees, exotics, complex securities, and the like?

Comparing Three Convertible Debt Valuation Models

In this article, I (a) describe and illustrate the implementation of three convertible debt valuation models, (b) show how their values for convertible debt respond to changes in the underlying valuation parameters, (c) examine the effects of changing each of the models such that the credit spread and the probability of default are not constant but vary inversely with the stock price, and (d) measure and compare the accuracy of each model when it is ...

In re Rural Metro Corp. Stockholders Litigation

Financial advisor aided and abetted directors’ breach of fiduciary duty by causing ill-timed, below-fair-value sale of the company based on manipulated valuation analysis, including false and material information related to precedent transaction analyses.

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