Journal of Business Valuation 2021 Edition
From the CBV Institute ...
Ghaidarov Offers a New Framework for DLOM
Ghaidarov, who has published papers related to option price models for estimating a discount for lack of marketability (DLOM), presents a new concept for illiquidity discounts.
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 ...
Alternate Valuation Methods in the Era of COVID-19
COVID-19 has substantially affected the financial and economic characteristics of privately held and publicly traded businesses throughout the U.S. In this presentation, the presenters will address the valuation impact of COVID-19 and the potential distortions that can occur when traditional valuation approaches and methods are mechanically applied. In the current environment, it is important for analysts to think “outside-the-box” when performing business valuations with valuation dates occurring during the first and second quarter of 2020.
Volatility Adjustments for Industry, Size and Leverage
How well do you understand the theory and application of industry, size, and leverage adjustments for estimating equity volatility? Do you feel confident explaining it to a new analyst? A client? A judge? It may be time to get more confident. Join James Herr for a discussion of the basic concepts around applying volatility estimates in valuation, covering common pitfalls when calculating the basic volatility measure. Learn the differences between equity and asset volatilities, and ...
Journal of Business Valuation 2019 Edition
From the CBV Institute ...
Journal of Business Valuation 2015 Edition
From the CBV Institute ...
Equity Volatility Size Adjustments by Industry
This article provides a means for determining equity volatility size adjustments in estimating lookback equity volatilities for eleven different industry sectors based on twenty years of historical data. The industry-specific size adjustments can be used for estimating volatility for common equity in privately-held or illiquid publicly traded companies. Consistent with an earlier article, I find that size adjustments vary significantly among industries, but I also find relatively minor differences for any given industry based on ...
The Impact of Size and Leverage on Equity Volatility
Many valuation practitioners rely on equity volatilities when performing equity allocations, derivative valuations, discounts for lack of marketability, or contingent consideration analyses. Yet in contrast to other commonly accepted valuation adjustments, practitioners still appear hesitant to adjust historical or implied volatilities from publicly traded comparables for differences in size when performing these types of analyses, despite theory that these factors should impact equity volatility. Instead, preference is usually made in the industry to adjust equity ...
Size-adjusting Volatility
Since the valuation of corporate securities with option-like features issued by the private companies requires an estimate of volatility based upon comparable public companies and the comparable companies are often larger, the use of unadjusted volatilities may understate the volatility of the subject private company. This article provides an up-to-date research review on the need for size-adjusting volatility. We also present a simple methodology to size adjust comparable companies that is easily updated with data ...