Business Valuation Update
- How to Review a Report’s Valuation Methodology
- Ideas for Solving Two Problems in the BV Profession
- How Do Your Firm’s Benefits Stack Up?
- Using Rule of Thumb Data to Uncover Cooked Books
Court Dismisses S Corp Tax Argument in Fair Value Buyout
In statutory fair value proceeding, court adopts income-based approach reconciling key differences in expert analyses regarding historical earnings period, tax rates, and normalization for intercompany transactions; court rejects market analysis.
Expanding the Cost of Capital Horizon Beyond CAPM
We will see many advances in estimating the cost of capital in future years, as it is still relatively unknown how risk is priced. That was one of the messages of two sessions on cost of capital at a recent valuation conference. In addition, insights were offered on such topics as normalising the risk-free rate, the ERP, the size premium, and liquidity.
What to Do About Applying Size Premia in Australia
The size premium is an important valuation issue for two reasons: (1) it is difficult to estimate; and (2) its inclusion in deriving a cost of capital can have a material effect on the outcome of a valuation assignment. This article provides an overview of the current status of the size effect and size premia in Australia, examples of cases from Australian courts and tribunals in which size premia have been considered, and the issues and challenges faced in estimating size premia within the Australian market.
Why Valuation Experts Should Not Use the Term ‘Nonmarketable’
For the past two years, our firm has not used the term “nonmarketable” as a descriptive for a conclusion of value. We feel it is completely inappropriate to use a negative term when informing clients of the value of their controlling or minority interest. Rather, we use more positive terms that are part of a new paradigm of describing levels of value.
Seven Models for Estimating the Cost of Equity in a Global Setting: The Pros and Cons
What is a good method for developing the equity component of international cost of capital using the capital asset pricing model (CAPM)? Jim Harrington, director at Duff & Phelps (U.S.) and co-author of the 2015 International Valuation Handbook – Guide to Cost of Capital, explains that you can use a number of models to estimate the cost of equity capital in a global environment, but there is no consensus among academics and practitioners as to the “best” model to use.
The Specific Risk Dilemma—Is It in the Eye of the Beholder?
How do you quantify company-specific risk in a discounted cash flow valuation? More specifically, how do you reflect the risk of anticipated new legislation or the possibility of delay in a new company project? In our experience, it is an important valuation consideration and is often something that a valuer has considerable difficulty in applying his or her judgement to assess.
Cost of Capital Options Increase As ERPs Remain Stable
There no longer seems to be any debate about which study of U.S. historic capital markets is “definitive.” Now that 2007 updates are available to both Morningstar/Ibbotson’s Stock, Bonds, Bills, Inflation® (SBBI) Valuation Edition Yearbook and Duff ...
Valuing Assets Held by Private Equity Funds— New Guidance from PEIGG
In September 2006 the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 157 Fair Value Measurements. While the FASB fair value standard is applicable to all areas where fair value is used in Generally Ac ...
Grabowski to Appraisers: Read More than Just the Back Page of Ibbotsons
In this exclusive interview, Roger Grabowski, ASA (Duff & Phelps, Chicago) discusses the recent Risk Premium Report (RPR) update, its strengths as well as its weaknesses, and plans for future expansion.
Conference Report: IP Value Is at the Center of Transfer Pricing Tax Planning
"IP is the central and residual claimant to profits," began Wes Cornell (Ceteris) in his presentation at BVR's IP Valuation Summit on September 15. "Companies are aggressively moving IP and their profit and income streams to low-tax jurisdictions as a ke ...
Panel challenges traditional levels of value chart at the 20th Advanced Business Valuation Conference
The 20th annual American Society of Appraisers (ASA) Advanced Business Valuation Conference was a huge success, despite attendance of only about 325 compared to pre-Sept. 11 projections of 450 attende ...
The New Duff & Phelps Risk Premium Calculator
The new Duff & Phelps Risk Premium Calculator™ is available the first week in March with the newly updated 2011 Duff and Phelps Risk Premium Report. Designed by Roger Grabowski and James Harrington, the Calculator is a web-based application into which use ...
The New Duff & Phelps Cost of Capital Navigator—(Some of) Your Questions Answered!
Responses to audience questions during the first public demo of the Duff & Phelps online Cost of Capital Navigator, which will replace the print versions of the Valuation Handbook series.
Book Review: Understanding Business Valuation: A Practical Guide to Valuing Small and Medium Sized Businesses, Third Edition
Need a great resource on any and all things BV? The newly released third edition of Understanding Business Valuation: A Practical Guide to Valuing Small and Medium Sized Businesses, by Gary Trugman occupies a prime spot in my office reference library.
New Research From Grabowski and Abbott on Recovery and Growth
New upcoming research from Roger Grabowski (Duff & Phelps) and Ashok Abbott (West Virginia University) challenges conventional wisdom about long-term growth rates and economic recovery.
Does the Size Effect Still Exist? New Analysis From Pratt and Grabowski
In the upcoming fifth edition of their essential book, Cost of Capital: Applications and Examples, Shannon Pratt, FASA (Shannon Pratt Valuations), and Roger Grabowski, FASA (Duff & Phelps), reveal new analysis that examines the existence of the size premi ...
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.
Is 6% Now the Best Estimate of ERP?
The Ibbotson® SBBI® Valuation Yearbook indicates that the equity risk premium is 7.1%, while Duff & Phelps indicates 4.9%. But Roger Grabowski and Shannon Pratt, speaking at the recent BVR/FAE Thought Leadership Workshop of Cost of Capital in New York Ci ...
Risky Business: A Generous Helping of Company-Specific Risk
A potential exists for valuation analysts to overestimate the company-specific risk premium when valuing small businesses. For purposes of this discussion, company-specific risk and unsystematic risk are used interchangeably. “Small business” is defined ...
Duff & Phelps Decreases U.S. ERP Recommendation to 5.5% as of January 15
Duff & Phelps regularly reviews fluctuations in global economic and financial conditions that warrant periodic reassessments of the equity risk premium (ERP). Based upon current market conditions, Duff & Phelps is decreasing its U.S. ERP recommendation to ...
Global Perspective
Business valuation news from an international perspective.
BV News At-a-Glance
A monthly roundup of key developments of interest to business valuation experts.
BV News At-a-Glance
A monthly roundup of key developments of interest to business valuation experts.
BV News At-a-Glance
A monthly roundup of key developments from the standard setters, regulators, and valuation professional organizations (VPOs), plus noteworthy new books, research papers, and studies of interest to business valuation experts.
Duff & Phelps Moves Cost of Capital Data to Online Platform
Duff & Phelps is launching the online Cost of Capital Navigator, which will replace the print versions of the Valuation Handbook series.