Abstract

The valuation of customer relationship intangible assets relies on the projection of the expected future economic benefits and the forecast of customer retirement behavior. Historical attrition rates are commonly used to describe the expected decline in the customer population when valuing customer relationship intangible assets. When financial projections are presented using a partial period convention, special consideration is warranted for the development of an attrition forecast for the customer population.

Abstract

To value privately held companies, considered as nonquoted companies and thus with low marketability, two methods can be applied to adjust the business value for extra risk: (1) reducing the calculated value by the transaction costs or (2) raising the minimum expected rate of return by investor. The Spanish Accounting and Business Administration Association suggests use of the second method. This article examines its proposal in an empirical way, concluding that the discount rate estimated is 2.45% higher than that calculated by the traditional CAPM model, which implies a drop in company value of nearly 20%. In other words, the AECA's proposal can be considered a valid method for appraisers to calculate the discount rate in the context of valuing privately held companies.

Intangible Asset Valuation Overview and Update

Intangible asset education and certification are areas where the ASA is leading the valuation profession forward. From the initial offerings of BV 301, Valuation of Intangible Assets, in November 2007 to the present, we've accomplished quite a lot. In addition to a brief review of prior developments, we overview upcoming changes impacting intangible asset valuations and the benefits from obtaining the intangible asset valuation designation.

Past Activity - Intangibles Education and Certification

A timeline of key milestones for ASA intangibles initiatives follows:

November 2007 - First offerings of BV 301, Valuation

Editor’s Column

Economic Observations

Damages Measurement and the Business Valuation Report—Challenges and Pitfalls

Introduction and Overview

Attrition Analysis, the Partial Period, and Customer Retirement Forecasts

Abstract

The Discount Rate in Valuing Privately Held Companies

Abstract

From the Chair

Intangible Asset Valuation Overview and Update

Past Activity - Intangibles Education and Certification

Volume 30, Issue 2

From the Editor

Customer Concentration: Good, Bad, or Ugly?

From the Chair

Delaware Valuation Decisions, 2021 to 2024

Volume 44, No. 1 — Complete Issue