ThomsonReuters

MAY 6, 2021

The adjustment added to the risk-free rate to arrive at the risk-adjusted rate is often referred to as the “risk premium.” The risk premium reflects that market participants require compensation for taking on uncertainty. The risk premium may incorporate factors such as credit risk or market illiquidity.

Discounted Cash Flow 52

Discounted Cash Flow Risk Premium Risk-free Rate Intangible Assets 52

Equilest

JANUARY 7, 2025

By identifying earnings manipulation and guaranteeing more accurate firm values, this clever little technology is here to save the day. A high M-Score could indicate higher risk, warranting a higher discount rate and thus a lower valuation. It's like adding a risk premium, but based on hard data rather than gut feeling.

Business Valuation 40

Business Valuation Risk Premium Finance Start-ups 40

Musings on Markets

JANUARY 6, 2023

When valuing or analyzing a company, I find myself looking for and using macro data (risk premiums, default spreads, tax rates) and industry-level data on profitability, risk and leverage. I do report on a few market-wide data items especially on risk premiums for both equity and debt. Debt breakdown 2.

Risk Premium 52

Risk Premium Dividends Start-ups EBITDA 52

Equidam

APRIL 26, 2025

Critiquing Unsuitable Methods for High-Growth Startups Several traditional or overly simplistic methods fail to adequately capture the unique characteristics of technology startups. butcher, barber) where assets are tangible and customer acquisition straightforward, it breaks down for technology startups.

Discounted Cash Flow 59

Discounted Cash Flow Terminal Value Book Value Beta 59

Musings on Markets

JANUARY 9, 2021

By focusing so much attention on a small subset of companies, you risk developing tunnel vision, especially when doing peer group comparisons. In the same dataset where I compute historical equity risk premiums, I report historical returns on corporate bonds in two ratings classes (Moody’s Aaa and Baa ratings).

Risk Premium 52

Risk Premium Market Capitalization Equity Start-ups 52

Musings on Markets

JANUARY 26, 2023

Having watched Tesla reinvest and grow over the last few years, it is clear to me that the company's been able to generate its growth with far less money invested in plant and more in technology and R&D than a typical auto company. The Market : The US equity market in January 2023 looks very different from the market at the start of 2022.

Start-ups 99

Start-ups Marketability Risk Premium Equity 99

Musings on Markets

NOVEMBER 9, 2021

I would be lying if I said that I have had clarity about Tesla's story over the last decade, because it has so many tangents, distractions and shifts along the way, flirting with narratives about being a battery company, an energy company and a technology company. for mature markets.

Start-ups 101

Start-ups Dividends Marketability Market Capitalization 101

Musings on Markets

JANUARY 31, 2024

In my last three posts, I looked at the macro (equity risk premiums, default spreads, risk free rates) and micro (company risk measures) that feed into the expected returns we demand on investments, and argued that these expected returns become hurdle rates for businesses, in the form of costs of equity and capital.

Equity 83

Equity Book Value Start-ups Corporate Finance 83

Appraisal Rights

JUNE 5, 2017

The various problems facing the company led the court to embrace the respondents’ theory that SWS would continue to face an uphill climb given its relatively small size, which prevented it from scaling its substantial regulatory, technological, and back-office costs. Hilltop’s Influence on the Sale Process Rendered Merger Price Unreliable.

Beta 40

Beta Risk Premium Capital Structure Discounted Cash Flow 40

Musings on Markets

FEBRUARY 18, 2025

Carrying this through to the real world, you should not be surprised to see technology and pharmaceutical companies, the two biggest spenders on R&D, report much higher accounting returns than they are actually earning on their investments.

Equity 52

Equity Book Value Marketability Start-ups 52

Musings on Markets

MAY 24, 2021

There are a few arguing that the shift to a technology-based economy has removed inflationary pressures permanently, pointing to the last decade where inflation fears never came to fruition. Consequently, as inflation increases, equity risk premiums will tend to increase.

Treasury 56

Treasury Start-ups Risk Premium Price to Book 56

Musings on Markets

FEBRUARY 15, 2023

Some of that variation can be attributed to different mixes of businesses in different regions, since unit economics will result in higher gross margins for technology companies and commodity companies, in years when commodity prices are high, and lower gross margins for heavy manufacturing and retail businesses.

Start-ups 52

Start-ups Equity Risk Premium Risk-free Rate 52

Equilest

JUNE 10, 2023

Changes in tax regulations, technology advancements, and shifts in customer preferences can impact the future prospects and growth potential of the business. Technology and Infrastructure In today's digital age, the technology and infrastructure employed by a tax preparation business can greatly influence its value.

Business Valuation 40

Business Valuation Fair Market Value Marketability Technology 40

Equilest

JUNE 13, 2023

Equipment, Technology, and Infrastructure The quality and condition of equipment, technology, and infrastructure directly influence the value of a disaster restoration business. Stay updated on the latest advancements, changes in regulations, and emerging technologies that can impact the business's value.

Business Valuation 40

Business Valuation Asset-based Approach Appraisal Intangible Assets 40

Appraiser Newsroom

JUNE 4, 2024

Kevin holds an MBA in finance from Georgia State University and a Bachelors in Chemical Engineering from the Georgia Institute of Technology. Amanda holds a PhD, dual master’s degrees from Stanford University and dual bachelor’s degrees from the California Institute of Technology.

Business Valuation 59

Business Valuation Intangible Assets Appraisal Finance 59

Musings on Markets

JULY 22, 2021

It would be churlish on my part to take issue with the bloat and selective disclosure in Zomato's prospectus, since they are following the script that other technology companies around the world have written for going public, but it is frustrating to read through 420 pages, and still be left in the dark on key numbers.

Marketability 99

Marketability Start-ups Equity Price to Book 99

Musings on Markets

JANUARY 12, 2021

The last decade, with it influx of user based companies and technology platforms forced me to think seriously about how to value a user, subscriber or rider and extrapolate from there to company value. Discount rates in intrinsic valaution have to change to reflect current market conditions, and can be expected to change over time.

Corporate Finance 52

Corporate Finance Start-ups Finance Marketability 52

Musings on Markets

JANUARY 27, 2021

In my last post , I described the wild ride that the price of risk took in 2020, with equity risk premiums and default spreads initially sky rocketing, as the virus led to global economic shutdowns, and then just as abruptly dropping back to pre-crisis levels over the course of the year.

Start-ups 52

Start-ups Marketability Equity Treasury 52

Musings on Markets

JANUARY 19, 2022

Using S&P's sector classification, I take a look at how each one did in 2022, looking at the percent changes in market capitalization: In contrast to 2020, when technology and consumer discretionary firms ran well ahead of the pack, the best performing sectors in 2021 were energy and real estate, two of the biggest laggards in 2020.

Risk Premium 99

Risk Premium Risk-free Rate Start-ups Equity 99

Musings on Markets

JANUARY 28, 2024

I use the data through the end of 2023 to compute all three measures for every company, and in my first breakdown, I look at these risk measures, by sector (globally): Utilities are the safest or close to the safest , on all three price-based measures, but there are divergences on the other risk measures.

Risk Premium 122

Risk Premium Beta Start-ups Equity 122

Musings on Markets

MARCH 19, 2022

The overriding message in all of this data is that Russia/Ukraine war has unleashed fears in the bond market, and once unleashed that fear has pushed up worries about default and default risk premia across the board.

Start-ups 100

Start-ups Risk Premium Equity Market Capitalization 100

Musings on Markets

JANUARY 8, 2022

Risk Premiums : You cannot make informed financial decisions, without having measures of the price of risk in markets, and I report my estimates for these values for both debt and equity markets. I extend my equity risk premium approach to cover other countries, using sovereign default spreads as my starting point, at this link.

Risk Premium 99

Risk Premium Start-ups Market Capitalization Corporate Finance 99

Musings on Markets

MARCH 25, 2021

For much of the last year, I tracked the S&P 500 and the NASDAQ, the first standing in for large cap stocks and the broader market, and the latter proxying for technology and growth stocks, with some very large market companies included in the mix. Risk premiums No effect or even a decrease. Riskfree rate will rise.

Equity 52

Equity Risk-free Rate Treasury Start-ups 52

Musings on Markets

FEBRUARY 27, 2023

An Optimizing Tool In my second and third data posts for this year, I chronicled the effects of rising interest rates and risk premiums on costs of equity and capital. at least with technology companies). Me-to-ism : The second and almost as powerful a force in determining debt policy is peer group behavior.

Equity 52

Equity EBITDA Start-ups Net Debt 52

Equidam

MAY 14, 2025

Categorisation poses a significant challenge in startup valuation, with investors and founders frequently mixing up markets, business models, industries, and underlying technologies. Equidam Category List ) Development Stage (Intrinsic Risk Factors) Development Stage focuses on intrinsic risk factors tied to the startups maturity.

Risk Premium 64

Risk Premium Risk-free Rate Beta Market Risk 64

Musings on Markets

MAY 3, 2025

At the start of the month, as has been the case for much of the last decade, the focus was on technology, partly because of its large weight in overall equity value at the start of 2025, and partly because of the punishment meted out to tech stocks during the first quarter of the year. trillion that they lost in the first week of the month.

Marketability 96

Marketability Start-ups Treasury Risk Premium 96

Musings on Markets

FEBRUARY 23, 2025

Breaking down the remaining sectors, real estate and utilities are the heaviest users of debt, and technology and health care the lightest. Reda estate and utilities continue to look highly levered, and technology carries the least debt burden.

Equity 78

Equity EBITDA Risk Premium Gross Debt 78

Musings on Markets

MARCH 15, 2025

Thus, my estimates of equity risk premiums, updated every month, are not designed to make big statements about markets but more to get inputs I need to value companies. That said, to value companies today, I have no choice but to bring in the economics and politics of the world that these companies inhabit.

Start-ups 132

Start-ups Risk Premium Marketability Equity 132

Musings on Markets

JANUARY 31, 2025

The AI story, before DeepSeek The AI story has been building for a while, reflecting the convergence of two forces in technology - more computing power, often in smaller and smaller packages, and the accumulation of data, on technology platforms and elsewhere. What is it that makes the DeepSeek story so compelling?

Start-ups 134

Start-ups Marketability Technology Risk Premium 134

Musings on Markets

APRIL 20, 2025

Instead, you will have to revalue the company, with adjustments to expected cash flows and risk premiums, given the crisis, and if that value exceeds the price, you should buy the stock. Contrarian Investing: The Psychological Tests! In the abstract, it is easy to understand the appeal of contrarian investing.

Start-ups 137

Start-ups Price to Book Marketability Equity 137

Equidam

APRIL 22, 2025

.” De-Risking the Future: The Role of Current Traction, Team, and Milestones If valuation is about the future, what role does the present play? While not a reward for the past, a startup’s current state its traction, team, technology, and milestones is critically important. [4] This de-risks the product/technology aspect.

Discounted Cash Flow 52

Discounted Cash Flow Marketability Risk Premium Start-ups 52

Equidam

APRIL 22, 2025

10] , [23] , [2] Discount Rate: The rate used to discount future cash flows is typically the cost of equity, calculated via the Capital Asset Pricing Model (CAPM): Cost of Equity = Risk-Free Rate + Beta * Market Risk Premium. [23] 23] Risk-Free Rate: Tied to government bond yields (e.g.,

Discounted Cash Flow 64

Discounted Cash Flow Terminal Value Marketability EBITDA 64