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Is Your Cost of Capital Data Backing You Into a Corner?

In a recent court case, the valuation expert tried to use professional judgment but the data being used did not support her opinion. The expert could not adequately explain why she chose not to go where the data led her.

Concerns Over Data Security in Online Cost of Capital Tools

Business Valuation Update attended the recent NYSSCPA business valuation conference in New York City where several attendees expressed concerns about entering sensitive client data into online tools for estimating the cost of capital. The providers of the Duff & Phelps Cost of Capital Navigator and BVR’s Cost of Capital Professional respond to these concerns.

BVU News and Trends August 2019

monthly roundup of key developments of interest to business valuation experts.

Tales From the Trenches: Company Research: The Internet May Be Right, But It May Also Be Wrong!

This is an article in a series of valuable lessons to be learned based on the experiences of seasoned valuation experts. While you may be able to find some of this advice in books, only real-life experiences can highlight the nuances that can only be found in the minds of the experts who have lived through many engagements.

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.

Trial offer for BVR’s online cost of capital tool

If you haven’t checked out BVR’s new Cost of Capital Professional, now’s the time to do it.

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.

20- and 10-year spot yields on T-bonds favored for risk-free rate

Two-thirds of survey respondents say they use the spot yield on Treasury bonds for their risk-free rate when developing an estimate for the cost of capital, according to BVWire’s latest survey.

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.

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).

‘We’re killing ourselves!’ with cost of capital complexity

That was the cry of one attendee at the NACVA conference in Salt Lake City during a session titled “The Cost of Capital Conundrum.”

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.

Sabre GLBL, Inc. v. Shan

In breach of fiduciary duty and misappropriation case, appeals court upholds arbitration award of “head start” damages; expert for employer calculated value to the employee from owing equity in competing company whose valuation was higher because of employee’s misconduct toward former employer.

In Misappropriation Case, Expert’s ‘Head Start’ Damages Calculation Survives Appeal

In breach of fiduciary duty and misappropriation case, appeals court upholds arbitration award of “head start” damages; expert for employer calculated value to the employee from owing equity in competing company whose valuation was higher because of employee’s misconduct toward former employer.

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.

Industry betas now included in CCPro platform

Users of BVR’s new Cost of Capital Professional (CCPro) platform now have the choice of two sources of industry betas to help in estimating the industry risk premium (IRP) component of the buildup method for developing the cost of capital for a private company.

Two Articles Addressing Firm Quality and Its Impact on the Size Effect

The authors discuss two recent papers that present the concept of firms’ quality and show that it plays an important role in understanding the size effect. Also discussed are papers that present a differing view.

No End in Sight to Size Effect Debate

A look at several recent articles on the so-called size premium that perpetuate the debate on this topic. Some appraisers feel that the size effect has diminished or disappeared since it was first documented in 1981, while others feel it is alive and well.

BVU News and Trends May 2019

A monthly roundup of key developments of interest to business valuation experts.

BVU News and Trends April 2019

A monthly roundup of key developments of interest to business valuation experts.

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