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BV News and Trends April 2024

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

Last chance! Take the Pepperdine survey on private capital markets

A recent BVR survey found that over a quarter (26%) of respondents use the Pepperdine Private Capital Markets Study to estimate the cost of equity.

Review of Surveys on Cost of Capital Data Sources and Inputs

The Kroll Cost of Capital Navigator continues to be widely used and accepted for estimating cost of equity (COE). But BVR’s Cost of Capital Professional has been gaining considerable steam since its launch in 2018, according to a BVR survey. Some other resources for estimating the cost of capital have also seen an uptick in usage.

BV News and Trends March 2024

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

Kroll-recommended ERP remains at 5.5%—for now

The latest cost of capital infographic from Kroll has the firm’s recommended U.S. equity risk premium reaffirmed at 5.5% when developing USD-denominated discount rates.

Global BVU News and Trends February 2024

Business valuation news from a global perspective.

Lower ERP likely for 2024, predicts Kroll

One of the “pivotal” trends for 2024 is a likely drop in the equity risk premium (ERP), predicts Kroll in its list of “10 Trends Shaping 2024.”

Reminder: The 2024 Pepperdine private cost of capital survey is open

Each year, Pepperdine University conducts an annual survey of expected rates of return with respect to private companies.

Damodaran posts his second data update for 2024

Focusing on the equity markets in the U.S. and across the world, Professor Aswath Damodaran (New York University Stern School of Business) has posted his second data update of 2024.

Damodaran posts his first data update for 2024

At the beginning of each year, Professor Aswath Damodaran (New York University Stern School of Business) generously posts a great amount of data on his website that include risk-free rates, equity risk premiums (ERPs), corporate default spreads, corporate tax rates, country risk premiums, and other data—all of which are free.

Kroll conducts survey of cost of capital inputs

In the last issue, we presented results of several surveys on the various resources practitioners use for estimating cost of capital.

BVR survey reveals COE data sources of choice

While the Kroll Cost of Capital Navigator continues to be widely used and accepted for estimating cost of equity (COE), BVR’s Cost of Capital Professional has been gaining considerable steam since its launch in 2018, according to a BVR survey.

Update on Current Inputs for Valuations Amid High Inflation

Carla Nunes and Jim Harrington, both with Kroll, present two very helpful charts on long-term inflation expectations and projections for long-term real GDP growth. The charts include the sources for developing the estimates.

Hitchner Updates the Risk/Return Spectrum for Cost of Capital

A good visual to use for checking the reasonableness of your cost of capital estimate is the spectrum of rates in the market. Jim Hitchner (Financial Valuation Advisors Inc.) has done an update to this spectrum, which can be used in valuation reports and in court.

BV News and Trends November 2023

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

Practical Considerations in Normalizing the Risk-Free Rate

Some valuation firms and practitioners have advocated that the risk-free rate of return (Rf) should be normalized when it is believed to be too low because of Federal Reserve Bank policies. Recent arguments for doing so have been based on technical economic analyses but have ignored practical aspects of normalizing Rf. This article is intended to address those practical considerations.

New Book Offers Template for Assessing ESG Impact on Firm Value

Based on some case studies, a new book includes a template that summarizes steps in assessing whether ESG factors are material enough to integrate into a valuation. The book is Valuation and Sustainability—A Guide to Include Environmental, Social, and Governance Data in Business Valuation, edited by Dejan Glavas (ESSCA, School of Management, Boulogne-Billancourt, France), who also wrote several chapters.

BV News and Trends October 2023

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

Global BVU News and Trends October 2023

Business valuation news from a global perspective.

10 Short Takes From NACVA’s July Super Conference

There were top speakers, interesting sessions, and a good turnout (about 200) for the three-day NACVA Business Valuation & Financial Litigation Super Conference in person in Snowbird, Utah (and also online). Here are a few quick takeaways from some of the sessions we attended.

Firms with better ESG ratings yield higher returns, per Kroll study

Companies with better environmental, social, and governance (ESG) ratings generally outperformed those with lower ratings over the 2013-to-2021 period, according to Kroll’s new ESG and Global Investor Returns Study.

BV News and Trends August 2023

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

Adjusting WACC for ESG: ±100 basis points proposed

When assessing environmental, social, and governance (ESG) factors on valuation, unless there is an impact to cash flow, risk, or growth, ESG has no effect on business value.

What keeps a bank CEO up at night?

Cybersecurity is the No. 1 concern of financial institutions, according to the “State of the Banking Industry Report” from Wipfli.

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