Company Specific Risk Premiums – Guidance and Practice from the US (2019 Congress)
Company-Specific Risk Premiums (CSRPs or Alphas) are frequently applied by valuation professionals when developing discount rates. While the CSRP is a quantitative adjustment, often the "support" provided by appraisers has been more qualitative in nature - often based on the valuation professional's assessment of riskiness in the cash flows. These premiums are facing increasing scrutiny from regulators and auditors in the US. As a result, the valuation profession in the US has been working provide guidance and best practices regarding when CSRPs can/should be applied and how they should be developed and supported. This session will provide an overview of the recent and upcoming guidance regarding CSRPs and practical examples of how professionals are now approaching CSRPs.
Adam Smith, Managing Director - PwC, New York