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New Research Strengthens Support for the Three-Stage DCF

Unpublished research from Roger Grabowski and Ashok Abbott reveals data on firm growth over three stages: startup, stabilizing, and long term.

BV News and Trends January 2023

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

Business Valuation Update Yearbook, 2023 Edition

January 2023 PDF, Softcover (426 pages)

BVR (editor)

Business Valuation Resources, LLC

It's that time of year again, BVR's “greatest hits” publication is here!  The Business Valuation Update Yearbook 2023 covers the previous year’s most groundbreaking and thought-provoking advancements in valuation.  It captures changes in regulations and professional standards, key takeaways from professional conferences, and tactical practice-building ideas. This critical desktop reference puts you ahead of the competition with on-the-ground reporting by the BVR editorial team including an Introduction by Andy Dzamba, BVR Executive Editor and insights from notable BV experts. Learn more >>

BV News and Trends December 2022

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

Most firms can’t forecast impacts of ESG

A new global survey highlights the difficulty in quantifying the financial impacts of environmental, social, and governance (ESG) factors.

BV News and Trends October 2022

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

Ramcell, Inc. v. Alltel Corp.

In this appraisal action to determine fair value, petitioner Ramcell Inc. exercised its appraisal rights in asking for a statutory appraisal of the value of its 155 shares of Jackson Cellular Telephone Co. Inc. The respondent, Alltel Corp. (dba Verizon Wireless), had converted the 155 shares at a value of $2,963 per share. “Respondent’s expert opines that Jackson’s per-share value was $5,690.92 at the time of the merger. Petitioner’s expert has offered two appraisal ranges, opining that, at the high end, Jackson’s per-share value was $36,016 on the merger date.” Both parties agreed that the DCF method should be the sole method for determining the value. The Delaware Chancery Court, using that method, determined the fair value of each share at $11,464.57. The court noted that the disparity in the parties’ valuations was due to disagreements as to the inputs to the DCF model and how they should be calculated.

Delaware Chancery Court Cites Differences in Cash-Flow Assumptions as Cause for Large Discrepancy in Value

In this appraisal action to determine fair value, petitioner Ramcell Inc. exercised its appraisal rights in asking for a statutory appraisal of the value of its 155 shares of Jackson Cellular Telephone Co. Inc. The respondent, Alltel Corp. (dba Verizon Wireless), had converted the 155 shares at a value of $2,963 per share. “Respondent’s expert opines that Jackson’s per-share value was $5,690.92 at the time of the merger. Petitioner’s expert has offered two appraisal ranges, opining that, at the high end, Jackson’s per-share value was $36,016 on the merger date.” Both parties agreed that the DCF method should be the sole method for determining the value. The Delaware Chancery Court, using that method, determined the fair value of each share at $11,464.57. The court noted that the disparity in the parties’ valuations was due to disagreements as to the inputs to the DCF model and how they should be calculated.

BV News and Trends September 2022

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

‘ESG Ratings: A Compass Without Direction’

That’s the title of a new paper out of the Stanford Graduate School of Business that examines the concerns over the reliability of the various ratings schemes for environmental, social, and governance (ESG) factors.

Let's Get Real About the Dividend Growth Model

The dividend growth model, sometimes called the dividend discount model or discounted cash flow model, is a commonly used tool for estimating the cost of equity capital, particularly in the context of utility rate setting and unitary appraisal. Although the assumption of constant growth in perpetuity is almost never realistic, the constant growth version of the model is still commonly used in practice. However, given modern computing technology, there is no reason not to use ...

BV News and Trends August 2022

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

Put ESG impact in numerator, not denominator

Currently, there is no empirical evidence to support including the impact of environment, social, and governance (ESG) factors in the cost of capital, so it should be reflected in the cash flows.

How Judges Compare Competing DCF Analyses

Two valuation experts are far apart in their opinion of value using the income approach. What does the judge focus on when comparing the two analyses?

Feedback wanted on ‘social value’

The Social Value Working Group at the International Valuation Standards Council has released its second paper in a series that examines whether “social value” can be a basis of value, the difference between social value and the social component of ESG, and whether the existing valuation principle of highest and best use can apply to social assets and social value.

BV News and Trends June 2022

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

The DCF is ‘untestable,’ per new paper

The discounted cash flow method works fine for bonds but not for businesses, projects, or stocks because it is untestable, claims a new paper.

Highlights from the NYSSCPA BV conference

BVWire attended the New York State Society of CPAs’ Business Valuation and Litigation Services Conference, and—as always—it was an excellent event.

Health Clubs & Gyms: Working Out the Value

Come and get your reps in! Learn what you need to know about the valuation of health clubs. Whether the club is a franchise or a stand-alone, the unique aspects of health club valuations require specific industry research to be performed that can make a big impact on the outcome of the valuation. Expert Gary Trugman has done the heavy lifting, and, by attending this program, participants will avoid making some of the fatal errors ...

Free model helps take DCF a step further

In an article “Analytical Insights From DCF Value Analysis,” the authors include a free model business valuers can use to take their “DCF calculation a step further and analyze the resulting value into four components.”

BV News and Trends April 2022

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

Typical Way to Estimate Long-Term Growth Is ‘Flat Wrong,’ Says Grabowski

New research calls into question the common practice of using long-term real GDP growth plus expected inflation in terminal values.

Sponsorships available for the AAML/BVR National Divorce Conference

Want to reach out to divorce attorneys?

Avoid This Mistake When Using an Exit Multiple in the Terminal Year

There is nothing wrong with using exit multiples on the terminal year of a DCF, but the devil is in the details.

Dates set for AAML/BVR National Divorce Conference

If you do any valuation work for divorce, you do not want to miss the National Divorce Conference, brought to you by the American Academy of Matrimonial Lawyers (AAML) and Business Valuation Resources (BVR).

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