Here I am writing another column from Portland OR. The project of updating the Cost of Capital: Applications and Examples expanded such that we are now coming out with three books:

Cost of Capital: Applications and Examples 4th ed.,
Cost of Capital: Applications and Examples 4th ed.,
Workbook and Technical Supplement and Cost of Capital in Litigation.

We are on a tight editing schedule over the next few months to get them all out in early Fall 2010.

During all of that, I have been watching the most interesting decline and recovery of the stock market (the equity-market volatility index

Abstract

Van Amburgh's methodology for allocating personal and enterprise goodwill is flawed. We present a standard empirical approach that can be applied to the problem of allocating goodwill. Based on survey data of professional accounting firms, we apply regression analysis and estimate the percentage of total goodwill that is personal goodwill. These results suggest that personal goodwill for relatively small professional accounting practices ranges from approximately 45% to 88% of total goodwill. The same methodology and data are also applied to the problem of determining an individual owner's share of total personal goodwill.

Abstract

Discounts for lack of marketability reflect expectations of elapsed time and/or expenses in converting illiquid assets into cash and can be a key factor in pricing assets. Because discounts for lack of marketability address market phenomena, they are best assessed through empirical data from market-based transactions, such as over-the-counter (OTC) convertible debt pricing. Of the 3,270 OTC firms examined, the majority issued convertible debt at a stock conversion price discount to market, yielding a median lack of marketability discount of 23.5% in 2005 and 20% in 2008. These discounts and lack of marketability are contrary to non-OTC convertible bond issuances.

Abstract

This study matches private firm sales transactions with publicly traded firms to examine the issue of discounts for lack of marketability. Using sales and profitability multiples for matched firms, we calculate median discounts that consistently exceed 50% and appear to be influenced by common financial factors such as size, profitability, and likelihood of financial distress. Our findings put into question the sizes of discounts typically applied in valuation engagements.

Editor's Column

An Empirical Basis for Allocating Enterprise and Personal Goodwill

Abstract

Stock Price Discounts for Lack of Marketability: OTC Market Empirical Results 2005–2008

Abstract

Can Publicly Traded Company Multiples Shed Insights on Discounts for Lack of Marketability?

Abstract

Location and the Liquidity of Private Businesses

Abstract

Attrition Analysis, Revenue Growth, and Customer Mortality

Abstract

From The Chair

Letter to the Editor

Volume 29, Issue 1

From the Editor

Customer Concentration: Good, Bad, or Ugly?

From the Chair

Delaware Valuation Decisions, 2021 to 2024

Volume 44, No. 1 — Complete Issue