This course focuses on the fundamental concepts for determining discount and capitalization rates for use in business and intellectual property appraisal assignments. The recently released and enhanced Cost of Capital Professional platform produced by Business Valuation Resources will be used to provide a hands-on demonstration of how to build and support a reliable discount rate for use in valuing closely held business and intellectual property.
Professional practitioners who are involved in business and intellectual property appraisal and economic damage assessments
After attending this presentation you will be able to...
- Recognize the difference between a discount rate and a capitalization rate and how to articulate this difference to clients and triers of facts
- Explore sources of information used in each component of the traditional build-up model used to develop reliable and supportable discount rates.
- Recognize the difference between a direct to equity method using a cap or discount rate versus the use of a weighted cost of capital model to value overall invested capital of an enterprise and why and when to use the two approaches.
Participants receive a solid overview of the fundamental concepts underlying cost of capital in the context of a closely held business with particular focus on the use of a build-up model. Where the data comes from will be a key focus, as will the areas the require subjective judgement with respect to supporting growth rates and unsystematic risk elements.
Basic cost of capital knowledge