Business Valuation Review Volume 30: Issue 1

Business Valuation Review is Now Electronic

You should have each received notice of our new mode of delivery - electronic. We believe this will be a great benefit to our readership. As the number of electronically delivered journals accumulates in future years, you will be able to access all previously electronically delivered journals via the Business Valuation Review website as long as you maintain your subscription.

We all owe a thank you to Susan Mueller, Managing Editor, and Phil Rogers, Publisher and Subscription Manager, for making this happen.

Economic Observations

As we reach the halfway point in

SRR has conducted a comprehensive study of restricted stock transactions, which are an important source of empirical data used in estimating discounts for lack of marketability. The study differentiates itself by analyzing more recent market transactions compared to older studies and by providing comprehensive analysis of factors that may impact the size of restricted stock discounts. Moreover, the study focuses on quantifying discounts associated with shorter holding periods than those observed in older studies. This article presents the comprehensive findings of the study.

In Greek mythology, Procrustes had an odd sense of hospitality: He abducted travelers, provided them with a generous dinner, and then invited them to spend the night in a rather special bed. He insisted the bed fit his guest to perfection. Those too tall had their legs chopped off with a sharp hatchet; those too short were stretched. In his latest book, The Bed of Procrustes, Nassim Taleb argues that those who use economic and financial models unwittingly play the part of Procrustes. Instead of changing models to fit reality, reality is distorted or ignored to fit our models. This study examines the Capital Asset Pricing Model (CAPM), Modified CAPM, Total Beta, the new Duff & Phelps risk model, and Fama French's Three Factor Model in this spirit and presents findings that may surprise many readers.

When making cash-flow projections, long-term sustainable growth typically is achieved within a manageable projection period. However, when the subject company has a large depreciable asset with a significant amount of depreciation expense that will continue for a long time but not into perpetuity, or the company has long-term debt that will take many years to be fully paid off, the typical model for projecting cash flow can become very cumbersome. This article presents a simplified way of incorporating these items into the cash-flow projection, without compromising the accuracy of the analysis.

Editor's Column

Business Valuation Review is Now Electronic

Economic Observations

The Stout Risius Ross Restricted Stock Study: A Recent Examination of Private Placement Transactions from September 2005 through May 2010

Modified CAPM: Robust or The Bed of Procrustes?

A Simplified Method for Long-Term Financial Projections

Regression Analysis and Discounts for Lack of Marketability

Letter to the Editor

Letter to the Editor

Volume 30, 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