BVU News and Trends March 2020
A monthly roundup of key developments of interest to business valuation experts.
Recent Cases from the Delaware Chancery: What Appraisers Need to Know Now
Join Bill Kennedy for a summary of key valuation issues ruled on by the Delaware Chancery and Delaware Supreme Court. Get coverage of recent cases and discover trends seen in the courts. Learn how the courts have treated the different valuation methods in recent cases, as well as factors to consider when applying the methods. No matter where you practice, the takeaways from this session will help valuation professionals deliver a quality, litigation-ready report.
Two new resources for 2020 UK ERP, risk-free rate, and other indicators
Pablo Fernandez, professor of finance at the IESE Business School, is surveying business valuation professionals in the UK to determine what cost of equity assumptions they are using for 2020.
Current BUM and CAPM cost of capital rates now available from BVR’s Cost of Capital Pro
Year-end 2019 data are now available in BVR’s Cost of Capital Professional.
YE2019 data are now in the Cost of Capital Professional
Year-end 2019 data, including risk-free rates, industry risk premia, equity risk premia, and size premia, are now available in BVR’s Cost of Capital Professional platform.
BVU News and Trends January 2020
A monthly roundup of key developments of interest to business valuation experts.
Implied ERP at 5.2% per Damodaran’s data update
Professor Aswath Damodaran (New York University Stern School of Business) has done his annual posting of data updates on his website that include risk-free rates, equity risk premiums, corporate default spreads, corporate tax rates, country risk premiums, and other data.
The most common error in DCF analyses? Following the recipe.
Pablo Fernandez, the professor of finance at IESE Business School, remains one of the most thoughtful observers of business valuation practices.
Will the ‘Boris Bounce’ increase the value of small and medium-sized enterprises?
In theory, clarification and stabilisation make markets happy, so the current road map to exit should encourage investors.
Pablo Fernandez on common errors using WACC
A new paper presents a real valuation a well-known investment bank performed using two usual methods that are supposed to provide the same value.
KPMG Germany offers updated cost of capital study—and database of IFRS impairment test WACC results
KPMG Germany collected WACC results from 312 companies in Germany, Austria, and Switzerland for its 14th edition of the ‘Cost of Capital Study,’ concluding that the average WACC across industries remains at 6.9%.
Spend more time on the numerator, expert panel advises
Attendees at a recent online workshop were urged to spend more time on the numerator (forecasts) of the valuation equation rather than the denominator (cost of capital).
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.
A simple look at betas—and other inputs to the income approach
When estimating a company’s cost of equity, we all know investors adjust for varying levels of risk.
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.
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.
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.