The Discount Rate in Damages: Dunn’s Cases You Need to Know BV appraisers and litigation experts are especially invaluable to attorneys when it comes to compiling and calculating the financial evidence in an economic damages/business valuation case. Fr...
Guest Article (3,659 words)
Business Valuation Update, August 2010
Illustration of Japan's rate development Japan, according to a July 1999 publication of Political Risk Services, was rated rather similarly to the U.S., according to the country rankings: Po...
James T. Budyak
Guest Article (2,542 words)
Business Valuation Update, January 2000
Editor’s note: This article emerged from a series of subscriber exchanges in the BVWire™ (beginning with issue #59-5) on the interpretation and application of the fair market value standard—in which the author first posited an alternative: "fool’s market...
Special Report (1,815 words)
Business Valuation Update, December 2007
When calculating damages awards in litigation, it is undisputed that the plaintiff’s projected economic losses must be discounted to their present value to avoid over-compensating for the harm caused by a defendant’s wrongful act.
Brian P. Brinig, Jeff H. Kinrich
Guest Article (2,430 words)
Business Valuation Update, September 2009
I’m relinquishing my Editor’s Column space in this issue in favor of Christopher Mercer’s article on Ibbotson Associates’ Valuation Report Certification Services.
Z. Christopher Mercer
Editor's Column (1,058 words)
Business Valuation Update, August 2003
Building on the recent equity risk premium study we presented (BVU, Nov. 2005) and one of our latest telephone conferences (Top Controversies in Determining Cost of Capital, Feb. 1, 2006), this article offers a new method to ‘smooth over’ the debate on a...
Guest Article (2,299 words)
Business Valuation Update, April 2006
This article is another installment in the long-running debate about whether small companies are riskier than large companies, all other things being equal.
John J. Kania
Guest Article (1,834 words)
Business Valuation Update, November 2003
After a shareholder loan has been deemed to be a bona fide debt of the company, payable to the shareholder, the valuation analyst has yet another task: determining the fair market value of that debt.
Christine L. Baker
Guest Article (2,650 words)
Business Valuation Update, November 2013
In determining the price to pay for a company, a buyer of a business ultimately looks to the return he will receive on his investment. That return might come in the form of annual dividends...
Guest Article (3,467 words)
Judges & Lawyers, March 2001
District court finds unique risks facing debtor in bankruptcy and emerging from it justify Bankruptcy Court’s increase of proposed discount rate and record supports confirmation of reorganization plan.
United States District Court Florida US, Action: Bankruptcy
Legal and Court Case Update (1,454 words)
Business Valuation Update, June 2014
Bankruptcy court finds that the discount rate related to a contract damages claim should incorporate the risk factors present at the time of contract execution, making risk-free rate inappropriate.
United States Bankruptcy Court Federal Circuit US, Action: Bankruptcy
Legal and Court Case Update (982 words)
Business Valuation Update, August 2011
This article examines the components of the discount rate, where to derive them, and how to use them in calculating the discount rate.
Data and Publications Update (127 words)
Business Valuation Update, August 2003
At every one of the several merger & acquisition meetings that I have attended in recent months, both buyers and intermediaries consistently say that smaller companies usually sell at lower multip...
Bruce A. Johnson, Michael Annin
Guest Article (1,522 words)
Business Valuation Update, July 1999
I've often said that the greatest challenge for skilled business appraisers is to quantify risk and translate the results into a required rate of return (discount rate). The latest work of Roger Gra...
Shannon R. Pratt
Special Report, SpotLight Valuation (1,387 words)
Business Valuation Update, December 1999
In the Income Approach Example on page 2 of the September BV Update , you show the calculation of a discount rate using the CAPM method. I have several questions about the calculation: 1.
Reader and Editor Exchange (901 words)
Business Valuation Update, October 1998
I just got the second edition of Shannons Cost of Capital, and when I read it Ill probably have egg on my face for the following comments, but here goes. 1. The buyers and sellers of bu...
Reader and Editor Exchange (245 words)
Business Valuation Update, January 2003
The discounted cash flow (DCF) technique is a staple of financial management textbooks, one might even say an idol not to be questioned. Our purpose is to show that the conventional way of computing D...
Guest Article (2,538 words)
Business Valuation Update, January 2001
The author presents specific due diligence guidelines for assessing the strength and weaknesses of international capital models.
James T. Budyak
Guest Article (1,875 words)
Business Valuation Update, May 2006
Delaware Chancery Court confirms its preference for the DCF approach in a statutory appraisal action as well as the CAPM for calculating the discount rate and the supply-side ERP, but rejects an adjustment to the size premium to account for the latter.
Court of Chancery Delaware US, Action: Dissenting Shareholder
Legal and Court Case Update (2,997 words)
Business Valuation Update, October 2012
Each year, business appraisers use the Probability-Weighted Expected Return Method (PWERM) to value tens of billions of dollars worth of private company common stock and common stock options. PWERM is one of the three approaches set for by the AICPA’s P...
Jeffrey C. Hooke
Guest Article (2,242 words)
Business Valuation Update, July 2010