Gross Mendelsohn

SEPTEMBER 13, 2022

Understanding risk factors is essential in determining how a business will be valued. Let’s consider what your business-owning clients need to know about company-specific risks and how they come into play when it’s time for a business valuation.

Specific Risk 84

Specific Risk Risk Premium Business Valuation 84

BVR

MARCH 28, 2022

Is anything “company-specific” per se? Company-specific risk is not an ideal name for this risk. All firms face company-specific risks, many of which are somewhat similar across industries and companies. For example, how many firms have you valued that had to deal with the risk of customer concentration?

Risk Premium 100

Risk Premium Specific Risk 100

Valutico

FEBRUARY 27, 2024

To refine the selection of the discount rate, it’s important to draw on inputs from credible sources regarding economic, industry and company specific risk factors. Capital Asset Pricing Model (CAPM): According to CAPM, the expected return on a stock has two main components: the risk-free rate and a risk premium.

Discounted Cash Flow 52

Discounted Cash Flow Risk Premium Risk-free Rate Beta 52

Andrew Stolz

AUGUST 5, 2020

If an investor moves money from the risk-free asset into the stock market, they should expect to earn a return in excess of the risk-free rate, what is called an equity risk premium. Unsystematic risks are risks specific to a particular stock, which is why they are also called, company-specific risk.

Risk-free Rate 52

Risk-free Rate Beta Weighted Average Cost of Capital Risk Premium 52

Peak Business Valuation

NOVEMBER 24, 2024

At Peak , these factors help us determine the company-specific risk premium. Customer Concentration: Having customers who make up a large part of revenue risks the company losing a large part of its revenue. Understanding these for an HVAC litigation valuation is paramount.

Business Valuation 52

Business Valuation Fair Market Value Appraisal Discounted Cash Flow 52

Musings on Markets

FEBRUARY 10, 2021

If you put all your money in one or the other of these companies, you are exposed to all these risks, but if you spread your bets across a dozen or more companies, you will find that company-specific risk gets averaged out. But what if the company is looking at a project in Nigeria or Bangladesh? as mature markets. for Ford).

Risk-free Rate 52

Risk-free Rate Risk Premium Start-ups Equity 52

Valutico

FEBRUARY 13, 2025

It quantifies an asset’s risk relative to the market. Beta’s limitations include its reliance on historical data, potential inability to capture short-term fluctuations and company-specific risks, and sensitivity to benchmark choice.

Beta 52

Beta Covariance Risk-free Rate Specific Risk 52