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.”
Participate in BVWire’s cost of capital surveys
BVWire is a conducting a series of short surveys to investigate how appraisers derive cost of capital in their valuations of private companies.
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.
BVU News and Trends May 2019
A monthly roundup of key developments of interest to business valuation experts.
Do you have a Rube Goldberg cost of capital process?
Wildly complicated gadgets designed to do very simple tasks was the specialty of Rube Goldberg, the Pulitzer Prize-winning cartoonist, sculptor, author, engineer, and inventor.
Upgrade to the Cost of Capital Professional highlights free webinar
A number of new enhancements to BVR’s Cost of Capital Professional platform were explained during a recent free webinar on March 6.
BVU News and Trends March 2019
A monthly roundup of key developments of interest to business valuation experts.
YE2018 data—plus enhancements—now in the Cost of Capital Professional
Year-end 2018 equity risk premia and size premia are now available in BVR’s Cost of Capital Professional platform.
Letter to the Editor: Comments on the Cost of Capital Professional
A user who tested out BVR’s new platform for estimating the cost of capital has some very thought-provoking comments on the use of historical data for the equity risk premium.
Response to Eric Nath’s Comments on the Cost of Capital Professional
Comments in response to the need to develop a “truly forward-looking required rate of return system that gives appraisers an understanding of how to estimate cost of capital for private companies and interests in private companies.”
BVU News and Trends February 2019
A monthly roundup of key developments of interest to business valuation experts.
Damodaran posts his 2019 data updates
Professor Aswath Damodaran (New York University Stern School of Business) has so far posted a series of five data updates on his blog, “Musings on Markets.”
Improving on historical data for the cost of capital
There are shortcomings to using historical data in developing an equity risk premium (ERP) when estimating the cost of capital, points out Eric Nath (Eric Nath & Associates LLC) in the February issue of Business Valuation Update.
Fernandez on badly explained finance topics
A number of topics relevant to business valuers including CAPM, WACC, betas, ERP, and returns are in the latest paper by Pablo Fernandez (University of Navarra, IESE Business School), "18 Topics Badly Explained by Many Finance Professors."
Failure to explain inputs gets expert excluded under Daubert
If more proof is necessary to show that courts across all legal fields dive deep into the details of valuation testimony, a recent damages case that arose in the context of a condemnation proceeding should do the trick.
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 ...
Expert’s Failure to Explain Basis for Compensation Analysis Renders Testimony Inadmissible
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.”
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.”