Valtrend - Butler Business Valuation

Testimonials - Valtrend® (Boise, Idaho)

Please see a selection of peer testimonials related to Peter’s efforts to champion an empirically-based cost of capital technique (referred to as total beta and/or the BPC below) for the business valuation industry:

New model for private company pricing sparks positive feedback
The Implied Private Company Pricing Line (IPCPL) is a new approach designed to eliminate the inherent problems in comparing public and private data and to be more reliable in estimating the cost of capital for a privately held business. After it was featured in the September issue of Business Valuation Update, readers sent some very positive feedback. For example: “The article on the private company pricing is extremely valuable to valuation professionals,” says Charles Grigsby (Grigsby Forensics & Valuation). “I have used the Butler-Pinkerton Calculator to achieve an objective determination of company specific risk as opposed to a subjective determination. The IPCPL is another objective determination (Butler is one of the authors) in achieving an objective determination of the cost of capital for a private company with sales lower than $50 million. The three authors of this article [Bob Dohmeyer (Dohmeyer Valuation Corp), Pete Butler (Valtrend LLC), and Rod Burkert (Burkert Valuation Advisors)] are among the best in the country and their research and resulting methodology is critical for application by all valuation analysts to achieve this objectivity.”

"Years ago, when I first attended a BPC session at a NACVA conference, I immediately recognized the BPC as a great step forward for the business valuation profession. Total Beta and the BPC made so much sense and represented such an improvement over the totally subjective methods that I wondered why I had not thought of it myself. Failure to utilize the BPC in the litigation environment could well be fatal to a Valuation Analyst’s expert career."

(Past Chairman of the NACVA Executive Advisory Board). (Texas)

"We believe that the BPC is a useful tool for appraisers who want a quantitative way to assess the maximum CSRP. What the Total Beta and calculator computes is the maximum or upper bound for the CSRP. A good appraisal should also use subjective techniques and judgment to determine the appropriate CSRP for the subject company."

Vicentiu M. Covrig, Ph.D., CFA and Daniel McConaughy, ASA, Ph.D.
(Finance Professors at Cal State Northridge)

"The BPC is a great tool for developing capital costs for hypothetical market participants. We've had general acceptance of this method in audit review, and it's a great time saver. Second, in documenting a decision regarding discounts for lack of marketability, we regularly use QMDM as one of the methods considered. The BPC enables us to develop actual market equity returns for smaller publicly traded companies, providing a lower limit for the expected return input in QMDM."

(Ohio and North Carolina)

"When my damages were presented to the opposing party the case promptly settled in our client’s favor. The BPC just feels right and is 'esthetically pleasing' so to speak to the target audience because it is so market driven."

James M. Skorheim, JD, CPA/ABV/CFF, CFE, CVA, CrFA

"Total Beta is simply the CAPM Beta minus the benefits of diversification and is appropriate in situations where investors are not diversified or only partially so. The Total Beta concept gives the appraiser an empirical measurement of company-specific risk that can augment or replace measurements based on intuition and subjective judgment. The BPC is a great tool for estimating cost of capital for privately-held companies."

Gary Schurman CFA, CPA/ABV

"The basic premise underlying the BPC is not controversial. When public guideline companies exist, the model provides a good framework from which to analyze and place in context the specific-company risk premium. Access to the BPC is priced such that it is affordable to use as appropriate."

Bob Duffy, CFA, ASA

"I am a strong proponent of the BPC and have started to use it to reinforce my benchmarking plus subjective judgment methodology."

Rand M. Curtiss, ASA, FIBA, MCBA

"I have found that the variance between the values determined by the income and Guideline Publicly Traded Company (GPTC) methods has been significantly reduced."

Donald P. Wisehart, ASA, CPA/ABV/CFF, CVA, MST
(Rhode Island)

"They may have created a tool for valuation professionals that is … possibly better than anything else out there for the determination of a discount rate. The BPC is a tool that every valuation analyst must have in his or her toolbox. I believe it is a tool that is a must have for all of us. This is perhaps one of the best contributions to our profession in a long time."

Gary Trugman, CPA/ABV, MCBA, ASA
(Florida and New Jersey)

"The BPC presents a way to utilize market information from guideline companies to objectively calculate the systematic and unsystematic risk to an investor in a privately-held investment who is not well-diversified, as opposed to subjectively trying to determine that risk. Through the use of total beta, we have found the calculation of the stand-alone, required equity rates of return of the publicly-traded guideline companies to be a great benchmark and useful tool in determining the required equity rate of return of the subject company."

Andrew M. Malec, Ph.D.

"I use the BPC as a baseline in my analysis of specific company risk. The Calculator is easy to use, easy to understand, and easy to explain."

Stuart Weiss, CPA/ABV, MBA, MS, CVA, ABAR

"The BPC has become one of our favorite tools used by our valuation team in determining a reasonable total cost of equity (TCOE) for small, medium, and large companies. The calculator does not claim to be some sort of panacea, nor represent itself as being the beginning and end to the TCOE discussion. We have found that while the BPC does not eliminate the subjectivity of the TCOE, it does however, represent a simple tool that, when combined with other data, provides us with useful information in support of our opinion for this critical valuation element."

Anthony Duffy CPA, ABV, CVA and Michael Henrickson CBA, AVA, ASA, BVAL
(New York)

"Ever since I first learned about the CAPM formula, I've been convinced that it is the right framework for developing the cost of equity capital. When it appeared that Beta in that formula did not adequately describe risk in the public markets - and especially in the private company market - I knew that there was some number in its place that would and began using an adjusted Beta based on my subjective judgment of a summary of all the factors which comprise risk for a specific company. To my knowledge, there is no better number currently available for this purpose than Total Beta as described in the BPC method and calculator. Not that it's the final answer - but it's far better than anything else out there and a major step forward in seeking out that elusive Beta substitute."

Don Tubb, ASA

"The BPC has become an extremely useful tool in our valuation practice. While we primarily use traditional methods for determining the cost of capital, we find BPC's "total beta concept" to be a very effective means for assessing the reasonableness of cost of equity and company-specific risk estimates of a private company. The BPC's use of empirical market data from public companies is invaluable when dealing with auditors and triers of fact.

Lindon A. Greene, CPA/ABV, ASA

"Whether you use BPC as an integral part of your valuation or as a sanity check, it is a very powerful tool to develop a market-based cost of equity capital."

Greg Tesone, ASA

Peter has been asked to speak around the country to educate his peers on total beta and the BPC. Please see the type of feedback Peter has received from his numerous presentations:

"Pete, you are a great presenter - not just a good one - but, you were, by far, the best we had this year!"

"Butler – great presentation!"

"That talk was excellent!"