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...
by Simon Cook | Nov 14, 2018 | Business Valuation
risk /rɪsk/ — a situation involving exposure to danger, from Italian risco “danger” Business value is a function of the future expected cash flows from the business and the risk attached to those cash flows. The value of a business is the present value of future cash...
by Simon Cook | Nov 3, 2018 | Business Valuation
Marketability discounts are often applied by business valuation experts to reflect the difficulty in selling shares in a private business compared to selling shares in a publically listed company. You can sell shares in a listed stock at the click of a button, with a...
Recent Comments