In November 2013 Bob Dohmeyer and Rod Burkert presented a new approach to cost of capital estimation for private businesses whose revenues are less than $150 million. That approach, the Implied Private Company Pricing Line (IPCPL) uses small private company transaction data to solve directly for the cost of capital for a typical risk private company with $150 million or less in revenue.

In this webinar Dohmeyer, Burkert, and fellow IPCPL co-creator Peter Butler present The Implied Private Company Pricing Model, or IPCPM. This model, a derivation of the IPCPL, is a response to requests from appraisers that Dohmeyer, Burkert, and Butler develop a model that adjusts the IPCPL for companies with outlier fundamental characteristics and which allows for a departure from the IPCPL line.

• Introduction
• The build-up method: peeling the onion
• Pepperdine survey
• The company specific risk premium issue
• The small stock premium issue
• The IPCPL: A way forward
• IPCPM: The solution
• Market clearing price beta
• Liquidity and debt capacity
• The IPCPM in practice
• Conclusion

• Learn how inherent flaws make the build-up method unreliable
• Learn how the IPCPL functions as an estimation of cost of capital for small sized companies
• Learn how the IPCPM allows the application of the IPCPL to a wider variety of target companies and valuation situations
• Learn how the IPCPM and IPCPL seek to provide a more reliable, less subjective determination of cost of capital