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Private Market Equity Prices and Transactions Costs: Generalized IPCPL Theory and Private Market Empirical Tests

Implied private company pricing line (IPCPL) theory is based on the fundamental assumption—taken from modern asset pricing theory—that two or more equity interests that have the same risk exposures and risk sensitivities must have the same expected rates of return. IPCPL theory, however, includes the additional assumption that transaction costs generally differ across equity interests and markets, and such differences influence expected rates of return. This study generalizes IPCPL theory to explain and predict the ...

The Implied Private Company Pricing Line (IPCPL): On the Nature, Scope, and Assumptions of IPCPL Theory

The implied private company pricing line (IPCPL) was recently introduced to the business valuation literature as a means of using public equity market data to estimate the (fair market) value of small- and medium-sized privately-held enterprises. The IPCPL is based on the fundamental assumption that no arbitrage opportunities exist between privately-held and publicly-held equity. This is the fundamental assumption underlying modern asset pricing theory. Although the IPCPL has generally been presented in the literature as ...

New independent analysis tests IPCPL reliability

What's in store for BV in 2015?

What were the most significant BV developments in 2014? What can we expect for 2015? BVWire posed these questions to the editorial advisory board of BVR’s Business Valuation Update. Here are a few comments.

Feedback wanted on new BUM/WACC Calibrator tool

NACVA praises new cost of capital model

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