New Country Risk Data Update Reminds Valuers of Factors to Consider
A data update from Aswath Damodaran (New York University Stern School of Business) helps valuation experts explain how they considered each of the risk factors in assessing value for business assets located outside of the U.S.
BVU News and Trends April 2023
A monthly roundup of key developments of interest to business valuation experts.
NFT Valuation: What You Need To Know
In 2021, nonfungible token (NFT) prices drastically increased and then dropped substantially just over year later. These digital assets can be difficult to grasp, but they now play a role in personal investment portfolios and on company balance sheets. As a result, valuations of digital assets will be needed for issues such as divorce litigation, estate valuations, bankruptcy litigation, fair value measurements, and more. This presentation will demystify these investments and teach attendees how the ...
Damodaran posts 2023 edition of ERP paper
The “dean of valuation,” Professor Aswath Damodaran (New York University Stern School of Business) has posted “Equity Risk Premiums (ERP): Determinants, Estimation and Implications—The 2023 Edition.”
NICE DLOM Method for FLPs Gets Peer Reviewed
A paper describing the theory and mechanics of the nonmarketable investment company evaluation (NICE) method for estimating a discount for lack of marketability (DLOM) has been published in the Business Valuation Review, the peer-reviewed journal of the American Society of Appraisers.
BV News and Trends March 2023
A monthly roundup of key developments of interest to business valuation experts.
Stout updates its restricted stock study companion guide
The 2022 edition of the “Stout Restricted Stock Study Companion Guide” is now available, and it reflects updated tables and graphs that contain new transactions.
Size effect is hibernating, per new paper
The size premium is more significantly related to monetary policy than to firm quality or to business cycle troughs, according to a new paper.
Users inspire update to the Stout DLOM calculator
Estimating a discount for lack of marketability (DLOM) has just become more robust with a new update to the Stout DLOM calculator.
Bickering BV thought leaders: What to think?
How often do we hear well-known, veteran valuation experts “vehemently” disagreeing with each other over various issues?
COE Estimates From Leading Data Sets Are All ‘Very Close’
Jim Hitchner conducted a hypothetical engagement using Kroll’s Navigator, BVR’s Cost of Capital Professional, the Pepperdine study, and Damodaran’s data to estimate cost of equity (COE).
New ‘Court Cases Method’ for DLOM Points Up a Conundrum
A new study analyzes court cases to determine a more legally defensible discount for lack of marketability (DLOM). But should business valuers look to court cases for “good” valuations?
Tax Court (Grudgingly) Allows Tax Affecting Under the SEAM Method
This was a gift tax valuation case the U.S. Tax Court decided. Gifts of minority interests in The Biltmore Co. were made from the its shareholders, the Cecils, to their children and grandchildren. The IRS audited the gift tax returns and assessed deficiencies for reporting too low fair market values of the gifts of The Biltmore Co. stock. Both sides presented experts to value the gifted interests. The experts agreed that the cash flows should be tax affected. The court accepted the tax affecting while allowing that it was not an admission by the Tax Court that tax affecting should apply in all cases. The Tax Court made changes to the values presented and cobbled together a final value that resulted in refunds to the taxpayers/petitioners.
Estate of Cecil v. Comm’r
This was a gift tax valuation case the U.S. Tax Court decided. Gifts of minority interests in The Biltmore Co. were made from the its shareholders, the Cecils, to their children and grandchildren. The IRS audited the gift tax returns and assessed deficiencies for reporting too low fair market values of the gifts of The Biltmore Co. stock. Both sides presented experts to value the gifted interests. The experts agreed that the cash flows should be tax affected. The court accepted the tax affecting while allowing that it was not an admission by the Tax Court that tax affecting should apply in all cases. The Tax Court made changes to the values presented and cobbled together a final value that resulted in refunds to the taxpayers/petitioners.
Damodaran examines impact of inflation on profitability
In his fifth data update for 2023, Professor Aswath Damodaran (New York University Stern School of Business) focuses on trends in company profitability in 2022, including the impacts of inflation.
Inflation appears to have peaked, per Kroll
The latest cost of capital infographic from Kroll says that inflation seems to have topped out toward the end of 2022.
Year-end 2022 data now in the Cost of Capital Professional
Year-end 2022 data, including equity risk premia, CRSP decile size premia, and industry betas/IRPs, are now available in BVR’s Cost of Capital Professional platform.
BVResearch Pro adds another issue of the ASA’s BV Review
Among many other resources, the BVResearch Pro platform contains the full archive of the Business Valuation Review going back to 1982.
BV Year in Review 2022: Ongoing Challenges
What did you miss in 2022? Catch up on the highlights in the business valuation profession through over 70 articles and hundreds of news items this newsletter covered in 2022.
How to Use the Latest DLOM Study for the Johnson/Park Empirical Method
An example of how to apply the Johnson/Park empirical method, which is based on the fundamental concept of risk and reward. The annual study serves as a basis to determine how much of an increase in the rate of return is required to compensate investors for the lack of marketability of a subject interest.
BV News and Trends January 2023
A monthly roundup of key developments of interest to business valuation experts.
More courts KO DLOM when business won’t be sold
Keep an eye out for courts in more states deciding to eliminate a discount for lack of marketability (DLOM) depending on whether the business will be sold.
Business Valuation Update Yearbook, 2023 Edition
January 2023 PDF, Softcover (426 pages)
BVR (editor)
Business Valuation Resources, LLC
Most States Reject Discounts in Appraisals and Oppression Cases—But There Are Important Exceptions
This article discusses, on a state-by-state basis, the rejection and acceptance of discounts for minority interest and lack of marketability in appraisals and in oppression and voluntary withdrawal cases. Discounts for lack of marketability at the shareholder level are rejected in most jurisdictions, but some states, including California and New York, still permit them.
Damodaran posts his data update for 2023
At the beginning of 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.