New paper on IBOR reform and valuation
For many years, interbank-offered rates (IBORs) have set the benchmark rate for lending on an unsecured basis.
Scalia v. Reliance Trust Co.
In an evolving ESOP case, court says DOL’s allegations that ESOP trustee and various directors engaged in breaches of fiduciary duties and caused the ESOP to enter a prohibited transaction (i.e., overpaid for company stock) require “fact-intensive inquiry” and cannot be resolved on summary judgment.
Court Says DOL Claims in ESOP Case Require ‘Fact-Intensive Inquiry’ and Denies Motions for Summary Judgment
In an evolving ESOP case, court says DOL’s allegations that ESOP trustee and various directors engaged in breaches of fiduciary duties and caused the ESOP to enter a prohibited transaction (i.e., overpaid for company stock) require “fact-intensive inquiry” and cannot be resolved on summary judgment.
BVU News and Trends February 2021
A monthly roundup of key developments of interest to business valuation experts.
Damodaran updates cost of capital data
Professor Aswath Damodaran (New York University Stern School of Business) has started 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—all of which is free.
YE2020 data are now in the Cost of Capital Professional
Year-end 2020 data, including equity risk premia, CRSP decile size premia, and industry betas/IRPs, are now available in BVR’s Cost of Capital Professional platform.
BVU News and Trends January 2021
A monthly roundup of key developments of interest to business valuation experts.
The Size Effect: Should We Care?
I read the entire edition of Business Valuation Review (Volume 37, Issue 3, Fall 2018) focused on ‘‘the size effect.’’ I have the following ‘‘big picture’’ comments after considering all four articles together and title my letter: The Size Effect: Should We Care?
Total Beta—Where Does It Fit in Valuation Theory
The valuation of any company by the discounted cash flow method is divided into two different tasks: forecasting cash flows and discounting these same cash flows using the appropriate discount rate. The latter requires a good understanding of the risks faced by the subject company's cash flows to be able to determine the appropriate risk premia to compensate a typical willing buyer and satisfy a typical willing seller. There is a high level of ambiguity ...
Vinoskey reply brief refutes DOL’s stock value and control claims
Argument continues in the contentious Vinoskey ESOP litigation, which is now in the 4th Circuit where the remaining defendant, Adam Vinoskey, has appealed the district court’s liability and damages findings.
Vanguard stock market forecast implies a U.S. ERP of 3% to 5%
Annual returns of U.S. stocks over the next decade are forecasted to be in the “modest 3.7%-5.7% range,” according to a recent market outlook report from Vanguard.
BVU News and Trends December 2020
A monthly roundup of key developments of interest to business valuation experts.
Global BVU News and Trends December 2020
Business valuation news from a global perspective.
D&P reduces recommended U.S. ERP to 5.5%
Duff & Phelps has decreased its recommended U.S. equity risk premium (ERP) from 6.0% to 5.5% for use as of Dec. 9, 2020, according to a client alert.
Side Effect of COVID-19: Beta Changes Impacting Business Valuations
The COVID-19 pandemic is causing betas and other measures of risk commonly used in company valuations to appear to have changed. Beta is a critical component used by valuation experts when determining the discount rate in business valuation. Even small changes in betas can cause large changes in the discount rate and, consequently, can cause large changes in valuation. In this panel discussion, Dr. Roper and Cliff Ang, CFA, will describe how the COVID-19 pandemic ...
DOL appellate brief pushes back in Vinoskey ESOP litigation
Neither side is letting up in the contentious Vinoskey ESOP litigation that has now moved to the 4th Circuit U.S. Court of Appeals.
Get a Sneak Peek at Control Premium Data on Acquired Companies
Every quarter, subscribers to the FactSet Mergerstat/BVR Control Premium Study receive a Control Premium Study publication that includes a thorough analysis of controlling-interest transactions whereby the transaction results in the acquirer obtaining a 50.01% ownership interest or more in the target company. A controlling interest is considered to have greater value than a minority interest because of the purchaser’s ability to effect changes in the overall business structure and to influence business policies.
D&P enhances infographic on cost of capital
Duff & Phelps has updated its infographic, “Cost of Capital in the Current Environment,” and has enhanced it with new data on the eurozone.
The Absence of a Size Effect: Letting Go Of The Size Premium
Many valuation practitioners believe that there is a size effect and add a size premium to their CAPM cost of equity. In this talk, Cliff Ang will demonstrate why the underlying premise behind the size effect no longer holds and discuss the academic literature and empirical evidence on the absence of a size effect. He then dives into the related issue, which is why valuation practitioners should let go of the size premium.
New Control Premium Study platform makes its debut
BVR subscribers have expressed a great deal of interest in invested capital premiums, which explains why many of them attended the free webinar on enhancements to the FactSet Mergerstat/BVR Control Premium Study.
Take Control of Your Premiums
Join BVR for a first look at the new Control Premium Study platform. In the session we will cover the basics of the control premium study, discuss the enhancements to the platform, and provide a walkthrough of how to best utilize the new platform to retrieve control premiums, minority discounts, and multiples.
ESOPs: good for employees but facing an uncertain future
A recent article in the New York Times extols the virtues of employee ownership through employee stock ownership plans (ESOPs).
Free webinar tomorrow on new Control Premium Study platform
Take a first look at BVR’s new Control Premium Study platform during a free webinar tomorrow, November 5.
BVR enhances implied minority discount offers with FactSet Mergerstat control premium upgrade
The value of control has been trending lower in the UK. Current overall data from the FactSet Mergerstat/BVR Control Premium Study of over 1,300 UK companies show a median increased value of controlling interest shares of only 20.7% (this converts to a median implied minority shareholder discount of about 17%).
BVU News and Trends October 2020
A monthly roundup of key developments of interest to business valuation experts.