Bank of America, N.A. v. Veluchamy (In re Veluchamy)
In a fraudulent transfer case involving S corp, court says valuation should reflect that buyers of S corps would experience a reduction in the value of the corporations' earnings because of the need to pay personal income taxes on those earnings.
Low Risk to Business Justifies Expert’s Capitalization Rate
In divorce case, appellate court upholds valuation of a small agriculture-related company based on the capitalization of net income approach; record supports court-appointed expert’s capitalization rate, including his selection of the supply-side equity r ...
Alexander v. Alexander
In divorce case, appellate court upholds valuation of a small agriculture-related company based on the capitalization of net income approach; record supports court-appointed expert’s capitalization rate, including his selection of the supply-side equity r ...
Top Ten Issues to Note When Selecting COC Data in Volatile Times
Deriving a defensible cost of capital (COC) for the capital asset pricing method (CAPM), modified CAPM, or the build-up method is frequently the most contentious issue in litigation involving the valuation of private companies or economic damages. Moreove ...
Valuers should lower equity risk premium component of discount rate
I am now convinced that the long-term arithmetic average general equity risk premium (currently 7.0%) is too high.
Specific company risk factor
In Dr. Pratts book, there is (page 76) "The Specific Risk Factor" and the "Expanded CAPM Cost of Capital Formula." This is a very basic question: The use of the expanded model, which include ...
Cost of capital data
I have just subscribed to the Shannon Pratts Business Valuation Update and I have a couple of questions about the information reported in the Cost of Capital section of your newsletter. M ...
PriceWaterhouseCoopers Updates Risk Premia Study
PricewaterhouseCoopers has released a new study by Roger Grabowski and David King that documents the historical relationship between company size and average rates of return. The new study covers the period 1963 through 1998 and is an update of material presented in the August 1997.
1999 Guide to Business Valuations has "fair value" chapter, much more
The new 1999 Guide to Business Valuations contains more new material than any edition in several years.
Build-up vs. CAPM Method
In the Income Approach Example on page 2 of the September BV Update , you show the calculation of a discount rate using the CAPM method. I have several questions about the calculation: 1.
Drawing a clear distinction between income and market approaches and methodology
The point of this column is to advocate that income approach methods be distinguished clearly from market approach valuation methods. The valuation profession has (somewhat arbitrarily) classified ...
Ibbotson addressing cost of capital needs for business valuation
Between its publications and its forums, Ibbotson Associates is charging forward in its quest to provide more and better data to help estimate the cost of capital, especially equity capital. Many ...
New studies quantifying size premiums offer strong cost of capital support
Roger Grabowski is a partner and national director of Price Waterhouse LLP Valuation Services Group. David King is a manager with Price Waterhouse LLP in their Chicago office. This repor ...
Evidence suggests Equity Risk Premium lower than conventional wisdom thinks: Part 1 of 2
On June 5 and 6 Ibbotson Associates held their first-ever Cost of Capital and Equity Risk Premium Conference (as distinguished from their Cost of Capital Workshop, described in the sidebar on page 4).
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