Corporate Finance Partner

Finiconsult Ltd. F-Valuation Software

Dear Madam/Sir ...,

You receive this message because you are interested in company valuation. You bought F-Valuation Software or downloaded a demo version in the past. Herewith the latest news on the risk premium 2013.

Last Risk Premium 2013 now avalailable.
After the credit crisis, the UK risk premium for the year 2013 moved slightly up to 1.67% from 1.56% for 2012. In 2011, the risk premium was still 4.05%. Both calculations are based on the maximum number of years since 1900 and used as method the unweighted average of all methods of calculation. The shortest forecasting method to determine the risk premium, based for example on 10 years, turned even more negative. For now comparative data from other sources are not yet available.

The 'risk free' UK rate is slightly down to 2.32% end 2012 from 2.45% end 2011. In total this gives actually about 3.99% remuneration for the equity component in company and other valuations. Currently other sources of business financing are still hardly available and/or often more expensive (before tax). Therefore financial leverage has practically lost its power to lower total financing costs. In these circumstances, a WACC of around 3.99% is the result, or conversely, a theoretical Price/Earnings relation of about 25. The actual average PE on almost all markets is much lower. In England for example, FTSE calculated actual PE of the UK All-Share index end 2012 at 12.32 and remained almost stable, being 10.60 end 2011 and 12,9 end 2010.

Under some assumptions, (strategic)investors, pension and investment funds should theoretically buy shares now. It looks as if a start has already been made judging from the increase in the UK All-Share index with about 15% in 2012. This year a lot of 'gurus advise you to invest more in equities than in bonds. Besides share selection, buying moments are then very important at a tactical level. Budgetary conflicts in the USA could well spoil the party in the coming months. The euro crisis appears temporarily under control. China could well slide its banking problems under the table for the time being.

A free demo can be downloaded from this website by clicking on the link: Free Software. The latest version 8 with the latest risk premiums can be purchased online with the link: Order Software.

Best Regards,

Finiconsult Ltd
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