A Certified Valuation Analyst is retained to value a specialized software development firm for a shareholder dispute. The firm's primary asset is a proprietary algorithm developed by one of the founding partners. During the analysis, it is determined that the algorithm's utility is heavily dependent on this partner's unique, ongoing insights and modifications. Which valuation concept becomes most critical in this scenario?
An analyst is calculating the cost of equity for a small, privately held manufacturing company using the build-up method. After establishing the risk-free rate, equity risk premium, and size premium, the analyst must consider the company-specific risk premium (CSRP). Which of the following factors would be most appropriate to include when quantifying the CSRP? (Select TWO)
When performing a valuation under NACVA Professional Standards, an analyst who performs a Calculation Engagement is permitted to issue a conclusion of value.
A CVA is valuing a privately-held company and has determined its enterprise value using a DCF analysis. To arrive at the value of common equity, the analyst must subtract all debt and debt-like items. Which of the following should be treated as a debt-like item and subtracted from the enterprise value? ```mermaid graph TD A[Enterprise Value (DCF)] --> B{Adjustments}; B -->|Subtract| C[Market Value of Debt]; B -->|Subtract| D[Debt-Like Items?]; C --> F[Equity Value]; D --> F; ```
In a valuation report, the reconciliation of value is the section where the analyst explains how different indications of value from various approaches were considered to arrive at a single conclusion of value. A common error in this section is to:
A consultant is using the Guideline Public Company Method to value a private construction firm. The consultant identifies several publicly traded comparables but notes that the private firm has significantly higher financial leverage (Debt/Equity ratio) than the public peers. What is the most appropriate next step for the consultant?
An analyst is valuing an early-stage biotechnology company with no current revenue but promising patented technology. The company will require several more years of significant cash burn before potential commercialization. Which valuation approach is generally MOST appropriate for this type of company?
When normalizing a company's income statement, a CVA identifies a one-time, non-recurring gain from the sale of a subsidiary. How should this gain be treated to properly reflect the company's sustainable earning power?
The Adjusted Net Asset Method is most likely to be the primary valuation method for which of the following entities?
A CVA is determining the Discount for Lack of Marketability (DLOM) for a minority interest in a stable, dividend-paying private company. The analyst is considering several empirical studies. Which type of study would likely provide the most relevant benchmark for this specific case?