Qualitatively New Approach to Business Valuation and Company Value

Peter Brusov () and Tatiana Filatova
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Peter Brusov: Department of Modeling and Systems Analysis, Financial University Under the Government of Russian Federation, 125167 Moscow, Russia
Tatiana Filatova: Department of Financial and Investment Management, Financial University Under the Government of Russian Federation, 125167 Moscow, Russia

Mathematics, 2024, vol. 13, issue 1, 1-20

Abstract: The objective of this work is to develop a qualitative new approach to assessing business and company value. For this purpose, two of the three income approach methods, CAPM and WACC, are modified. When modifying CAPM, a new model, CAPM 2.0, was created, within which business and financial risks were simultaneously taken into account. Moreover, for the first time, this was performed correctly and the inaccuracy, incorrectness and inconsistency of the popular Hamada model were shown. The developed approach corrects some of the shortcomings of the income approach. The new methodology significantly improves the accuracy of the assessment. The closeness of the results of the new methodology to the actual market value of Amazon company (AMZN) shows the importance and validity of this methodology, which should be used to evaluate the business and the value of the company.

Keywords: business valuation; company value; discounted income method; CAPM; CAPM 2.0; Brusov–Filatova–Orekhova (BFO) theory; Modigliani–Miller (MM) theory (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2024
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