by Simon Cook | May 29, 2020 | Business Valuation
I wondered if I should be using the Capitalisation of Excess Earnings method to value a business? The method originated in 1920 in the US, from a Treasury Department memorandum and later update as an Internal Revenue Service (IRS) Revenue Ruling. During prohibition,...
by Simon Cook | Apr 22, 2019 | Business Valuation
The Pepper Private Capital report was recently released. I’ve saved you the trouble and ploughed through it! I personally wouldn’t want to rely on it for valuation inputs (its US based anyway) but it might be an interesting sanity check (or not!). These are the bits...
by Simon Cook | Feb 19, 2019 | Business Valuation
Risk-averse investors demand a higher rate of return on an average equity risk investment compared to a risk-free investment. The difference in return is the Equity Risk Premium (ERP). ERP is the price of risk. What, however, are the factors that influence the ERP?...
by Simon Cook | Feb 19, 2019 | Business Valuation
Often business valuers use a higher required equity return for a small business compared to a similar, but larger business. The difference in equity returns is the small-cap premium. It refers to the premium small capitalised businesses (a low market value) are...
by Simon Cook | Feb 17, 2019 | Business Valuation
I like Professor Damodaran’s simple Bermuda triangle of valuations. According to the Professor, the three simple truths of valuation (the sides of the triangle) are: All valuations are biased. You just need to think about how you are biased and by how much. Be aware...
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