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RESEARCH UPDATE: Monthly Recap of Research Papers July 2024

The featured paper is “Beyond Subjective Weights—Risk Aware Reporting of Valuation Results for a Privately Held Business” by Mikhail Munenzon (InteleK Business Valuation & Advisory). Other papers of interest to valuation experts cover topics including ERPs and risk-free rates, valuation of data assets, quantitative disclosures and risk, and the impact of founder-family succession on firm value.

Global BVU News and Trends July 2024

Business valuation news from a global perspective.

New feature in Business Valuation Update spotlights research

To promote more of a connection between valuation practice and financial research, BVR’s monthly Business Valuation Update now includes a recap of research and scholarly papers that should be of interest to valuation experts.

BV News and Trends April 2024

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

Review of Surveys on Cost of Capital Data Sources and Inputs

The Kroll Cost of Capital Navigator continues to be widely used and accepted for estimating cost of equity (COE). But BVR’s Cost of Capital Professional has been gaining considerable steam since its launch in 2018, according to a BVR survey. Some other resources for estimating the cost of capital have also seen an uptick in usage.

BV News and Trends March 2024

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

Kroll-recommended ERP remains at 5.5%—for now

The latest cost of capital infographic from Kroll has the firm’s recommended U.S. equity risk premium reaffirmed at 5.5% when developing USD-denominated discount rates.

Lower ERP likely for 2024, predicts Kroll

One of the “pivotal” trends for 2024 is a likely drop in the equity risk premium (ERP), predicts Kroll in its list of “10 Trends Shaping 2024.”

Kroll conducts survey of cost of capital inputs

In the last issue, we presented results of several surveys on the various resources practitioners use for estimating cost of capital.

Update on Current Inputs for Valuations Amid High Inflation

Carla Nunes and Jim Harrington, both with Kroll, present two very helpful charts on long-term inflation expectations and projections for long-term real GDP growth. The charts include the sources for developing the estimates.

Practical Considerations in Normalizing the Risk-Free Rate

Some valuation firms and practitioners have advocated that the risk-free rate of return (Rf) should be normalized when it is believed to be too low because of Federal Reserve Bank policies. Recent arguments for doing so have been based on technical economic analyses but have ignored practical aspects of normalizing Rf. This article is intended to address those practical considerations.

BV News and Trends August 2023

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

BV News and Trends June 2023

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

Kroll lowers recommended ERP to 5.5%

Kroll has decreased its recommended U.S. equity risk premium (ERP) from 6.0% to 5.5% when developing USD-denominated discount rates as of June 8, 2023.

BVU News and Trends April 2023

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

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.”

BV News and Trends March 2023

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

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.

Global BV News and Trends January 2023

Business valuation news from a global perspective.

Valuations of German and European banks

The decline in market capitalizations coupled with a positive earnings outlook has led to record levels of the implied cost of equity of 14.8% for European banks and 17.8% for German banks, according to the latest edition of the Alvarez & Marsal’s “Germany Valuation Insights.”

Inflation showcased in lead-off session at the AICPA FVS conference

As this issue rolls off the (virtual) presses, BVWire is attending the AICPA & CIMA Forensic and Valuation Services Conference.

Inflation, volatility trigger increase in ERP, per Kroll

Kroll has increased its recommended U.S. equity risk premium (ERP) from 5.5% to 6.0% when developing USD-denominated discount rates as of Oct. 18, 2022.

BV News and Trends June 2022

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

Global BV News and Trends June 2022

Business valuation news from a global perspective.

BV News and Trends May 2022

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

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