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Global BV News: KPMG Germany releases 2019 cost of capital study

Subtitled “The Calm Before the Storm—Rising Profits and Deflated Values?” the 14th edition of the Cost of Capital Study from KPMG Germany examines, among other things, the impact of regulatory interventions, scarcity of resources as well as digitalization on business models, their performance (cash flows) and their risk (cost of capital) by industry sector.

Court Says Corrected DCF Still Supports Original Fair Value Determination

Responding to petitioners’ motion for reargument, court concedes and corrects errors in court’s original DCF analysis but finds corrected DCF model still corroborates the original fair value determination; court affirms its reliance on unaffected market price as fair value indicator.

In re Appraisal of Jarden Corp. (II)

Responding to petitioners’ motion for reargument, court concedes and corrects errors in court’s original DCF analysis but finds corrected DCF model still corroborates the original fair value determination; court affirms its reliance on unaffected market price as fair value indicator.

Survey: Most appraisers look backwards for ERPs

The historical approach (ex post) is the preferred approach in estimating the equity risk premium (ERP), according to 76% of respondents to our latest survey.

Cost of capital platforms topline Virginia conference September 19-20

BVWire will be heading to Glen Allen, Va., for the Business Valuation, Fraud & Litigation Services Conference on September 19-20, sponsored by the Virginia Society of CPAs.

Ex post approach for ERP favored in early survey results

Our latest minisurvey on the cost of capital reveals that the historical approach (ex post) is the preferred approach in estimating the equity risk premium (ERP), cited by 75% of respondents.

Which ERP camp are you in? Please take our survey.

When you drive your car, should you look through your windshield or the rearview mirror?

BVU News and Trends September 2019

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

Do UK business valuators struggle to explain themselves? Perhaps it’s because of ‘18 topics badly explained by many finance professors’

The confusion resulting from many finance practices isn’t your fault, says Pablo Fernandez (professor of finance, IESE Business School in Madrid) in a new and highly readable essay.

Early survey results on risk-free rates of choice

Preliminary results from our latest cost of capital survey reveal that the spot yield on the 20-year U.S. Treasury bond is most often used as the basis for the risk-free rate.

Part 2 of our cost of capital survey: risk-free rates

Please take part in the second in our series of short surveys to investigate how appraisers derive cost of capital in their valuations of private companies.

In re Appraisal of Jarden Corp. (I)

Court finds record shows unaffected market price is best evidence of fair value; court says company expert’s efficient market analysis and event study provide strong support for use of market price; court’s own DCF analysis generates value close to market price, thus corroborating market price.

Court of Chancery Rules Unaffected Market Price Is Best Evidence of Fair Value

Court finds record shows unaffected market price is best evidence of fair value; court says company expert’s efficient market analysis and event study provide strong support for use of market price; court’s own DCF analysis generates value close to market price, thus corroborating market price.

Is someone peeking at your cost of capital estimates?

If you use one of the new online tools that help you estimate the cost of capital, you may be worried about data security.

Interesting results from our cost of capital survey

A significant number of valuation experts look to the private capital markets when estimating the cost of capital for a private firm, according to a BVWire survey.

Should business valuators use ‘implied’ equity risk premiums? Damodaran says yes

The free, 11th annual update to ‘Equity Risk Premiums (ERP): Determinants, Estimation and Implications—The 2019 Edition’ is now available from Professor Aswath Damodaran (New York University Stern School of Business).

Reminder: Take our cost of capital survey

Our thanks to those of you who took the first in a series of short surveys to investigate how appraisers derive cost of capital in their valuations of private companies.

Damodaran posts 2019 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 2019 Edition.”

Business Valuation OIV Journal Spring 2019

Business Valuation OIV Journal has been created by Organismo Italiano di Valutazione (OIV), the Italian Valuation Standard Setter, to provide a forum for discussion and to foster cultural progress in the field of business valuation. In this issue, articles include "Company Valuation as Result of Risk Analysis: Replication Approach as an Alternative to the CAPM"; "Residual Income Model and Abnormal Returns: A Comparison to Factor Styles and Sell-Side Analysts"; and "Critical Issues When Valuating Small Businesses".

Business Valuation OIV Journal Fall 2018

Business Valuation OIV Journal has been created by Organismo Italiano di Valutazione (OIV), the Italian Valuation Standard Setter, to provide a forum for discussion and to foster cultural progress in the field of business valuation. In this issue, articles include "Implied Cost of Capital: How to Calculate It and How to Use It"; "Solvency II Framework in Insurance Equity Valuation: Some Critical Issues"; and "Bank Valuation Using Multiples in U.S. and Europe: A Historical Perspective".

New cost of capital resources available

Two sources of industry betas were introduced this week 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.

Size-adjusting Volatility

Since the valuation of corporate securities with option-like features issued by the private companies requires an estimate of volatility based upon comparable public companies and the comparable companies are often larger, the use of unadjusted volatilities may understate the volatility of the subject private company. This article provides an up-to-date research review on the need for size-adjusting volatility. We also present a simple methodology to size adjust comparable companies that is easily updated with data ...

Rover Pipeline LLC v. 10.55 Acres

In condemnation case requiring fair market value analysis to determine compensation due to landowners, court excludes defense expert testimony, citing failure to follow mandated methodology and standard of value; court calls aspects of loss calculation based on income approach “disturbing.”

BVU News and Trends June 2018

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

The New Duff & Phelps Cost of Capital Navigator—(Some of) Your Questions Answered!

Responses to audience questions during the first public demo of the Duff & Phelps online Cost of Capital Navigator, which will replace the print versions of the Valuation Handbook series.

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