What a difference risk makes in cost of capital calculations
Mike Pellegrino (Pellegrino and Associates) offered attendees at his BVR teleconference on An IP Cost of Capital Estimation Model, August 20th a simple example of the impact success rate estimates have on cost of capital determinations for early stage products and companies. Pellegrino’s new model factors in observable market data for holding periods, success rates, [...]
One-time opportunity to try BP Calculator for free
On Friday, August 28th, BVR will welcome Peter Butler and Keith Pinkerton, creators of the Butler Pinkerton Calculator™ (BPC), as they conduct a special one-hour free webinar. Featuring the latest and best techniques for using this tool to objectively quantify company-specific risk premiums (CSRPs) and total costs of equity (TCOEs) for guideline publicly-traded companies, this [...]
Contribute data from your BV firm…and receive small business executive compensation data for free
Besides government and professional association studies, one of the better general reviews of owner/CEO/President/CXO compensation for small businesses is the on-line Small Business Compensation survey from salary.com. The 2009 version of the survey is now in process, and if you participate now, you receive the results for free.
Congratulations to Matt Crow at Mercer Capital
Ken Patton has retired as president of Mercer Capital, and senior vice president Matthew R. Crow, the 15-year veteran of Mercer, has stepped into the position. Patton was a co-owner of Mercer having started with the firm in 1984 just two years after CEO Christopher Mercer founded the company. He has served as president since [...]
ASA and CICBV will pursue international BV organization
In a major step forward for the BV profession, the American Society of Appraiser’s Board of Governors voted August 19th to allow its Business Valuation Committee (BVC) to formulate a business plan regarding a joint venture with the Canadian Institute of Chartered Business Valuators (CICBV) to expand internationally. The organizations will use education to accomplish [...]
Butler and Pinkerton To Host Free Webinar
On Friday, August 28 BVR will welcome Peter Butler and Keith Pinkerton, creators of the Butler Pinkerton Calculator (BPC) for a special one-hour free webinar, “Meet the Butler Pinkerton Calculator.” Featuring the latest and best techniques for using what has become the preeminent tool to objectively quantify company-specific risk premiums (CSRPs) and total costs of [...]
IP Discount Rate Model—Looking Ahead
So why do the CAPM, build-up method, and similar models fall short when deriving a discount rate for IP projects? For starters, they “look backwards” by relying on historical information. It’s “like trying to drive a car forward by looking in the rearview mirror,” quipped Mike Pellegrino in BVR’s teleconference this afternoon -”IP Cost of [...]
How do you select a holding period for an long-lived asset like a trademark
IP valuation expert Mike Pelligrino confirms that the cost of capital is a function of the investor. So, while the McDonald’s trademark might have “infinite” value over time, the holding period for an investor might be 10 or 20 years. So, when calculating IP values, your rate of return should be influenced by the holding [...]
Concerned about management forecasts?
Many BVR customers recommend the classic business text The Principles of Forecasting as a basis for critiquing management estimates. This is particular true in early stage valuations. The guide is a great addition to every appraiser’s bookshelf. This is part of the work from Scott Armstrong available at www.forecastingprinciples.com. A short summary of nine key [...]
Observable elements of the “alpha” for early stage IP valuations
Mike Pelligrino’s new model for valuation of early stage companies replaces the “alpha” judgment in a build-up model discount rate with observable data for: holding period (time to generate return), success rate of commercializing the IP, expenses (carried interest, VC management fee) and target returns (for the future, not for the past). “You can go [...]
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