Using a size premium could trigger Daubert trouble, says new article
Adding a size premium to the cost of equity could make an expert’s testimony subject to a Daubert challenge, says Clifford Ang (Compass Lexicon) in a recent article.
More concern about the validity of the size premium factor
Most business valuers consider a size premium when calculating cost of capital for financial reporting purposes.
BVU News and Trends May 2020
A monthly roundup of key developments of interest to business valuation experts.
Duff & Phelps raises US ERP from 5.0% to 6.0% for 1Q valuation dates
D&P has increased its recommended U.S. equity risk premium (ERP) from 5.0% to 6.0% for use as of 25 March 2020.
D&P increases recommended U.S. ERP to 6.0%
Duff & Phelps has increased its recommended U.S. equity risk premium (ERP) from 5.0% to 6.0% for use as of March 25, 2020, according to a client alert.
BVU News and Trends March 2020
A monthly roundup of key developments of interest to business valuation experts.
Examining the Correlation Between IP and Startup Valuations
Based on recent studies, this article discusses the role that intellectual property (IP) assets play in startup valuations and the IP strategy startups that recently went public implemented.
Delaware Court of Chancery says no to expert’s novel approach to beta calculation
In an appraisal proceeding in which the Delaware Court of Chancery favored the discounted cash flow analysis as the means with which to determine fair value, the court had sharp words for the company expert’s decision to introduce a new way for calculating equity beta.
Current BUM and CAPM cost of capital rates now available from BVR’s Cost of Capital Pro
Year-end 2019 data are now available in BVR’s Cost of Capital Professional.
YE2019 data are now in the Cost of Capital Professional
Year-end 2019 data, including risk-free rates, industry risk premia, equity risk premia, and size premia, are now available in BVR’s Cost of Capital Professional platform.
BVU News and Trends January 2020
A monthly roundup of key developments of interest to business valuation experts.
2019 Key Valuation and Damages Cases
A discussion of the court cases that have dominated the conversation in 2019 among financial experts by making law or influencing attitudes on key valuation issues.
Business Valuation Year in Review 2019
A look back at some of the developments in the BV profession in 2019, including important court rulings on tax affecting pass-through entities, a possible upending to the goodwill model, a new cost of capital platform gaining traction, and advances in fair value for financial reporting.
Implied ERP at 5.2% per Damodaran’s data update
Professor Aswath Damodaran (New York University Stern School of Business) has done 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.
BV 2020: What to watch for in the new year
Our last issue covered some highlights of the year 2019 in business valuation, so now let’s look ahead to 2020.
New Meta-Analysis Study Reveals Diminished Size Premium
There have been many studies on the size premium but with conflicting results. Now, the first “meta-analysis” of the size premium provides an estimate that is smaller than what many people believe, according to a new paper.
Musings on the Cost of Capital
A veteran appraiser presents an interesting retrospective on the cost of capital and offers some observations on current practice.
BVU News and Trends December 2019
A monthly roundup of key developments of interest to business valuation experts.
Noteworthy highlights of the year in BV for 2019
It was a notable year for the business valuation profession in 2019, and BVWire was on the scene each and every week covering all the important developments.
Research paper finds the size premium mostly nonexistent
“Investors require no premium to hold small stocks over big stocks in normal times,” says a recently updated paper on the size premium.
BVR and Duff & Phelps Cost of Capital Platforms Go Head-to-Head at VSCPA
Both platforms give similar results when estimating the cost of capital for private firms. They were put through their paces at a recent conference presented by the Virginia Society of CPAs.
Tales From the Trenches: Buildup Approach—The Data May Be Correct, But Is the Conclusion Appropriate?
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.
D&P lowers its normalized risk-free rate to 3.0%
Duff & Phelps has decreased its U.S. normalized risk-free rate from 3.5% to 3.0% effective 30 September 2019, the firm says in a statement.
Tales From the Trenches: The Case of the 70% Equity Interest Valued as a Minority
Don’t assume a 70% interest represents a majority for valuation purposes. This is the latest in our series of articles from veteran appraisers based on actual engagements.
BVU News and Trends October 2019
A monthly roundup of key developments of interest to business valuation experts.