Build Up Method - Business Valuation

The video tutorial explains the build-up method of business valuation, which is similar to the earnings capitalization model. It involves determining normalized earnings and dividing them by a capitalization factor to estimate a company's value. The capitalization factor is derived from the expected rate of return, which includes the risk-free rate, equity risk premium, size premium, and company-specific premium. The tutorial details how to calculate these components and emphasizes the importance of assessing company-specific risks. The build-up method focuses on determining the discount rate for extrapolating company value.

What new insight or understanding did you gain from this video?

Evaluate responses using AI:

OFF