• Litigation Consulting - QuickRead Top Story - Valuation/Appraisal

    Is the Risk-Free Rate Really Risk Free?

    February 18, 2026

    Deconstructing the Idea of the Risk-Free Rate To evaluate future risk factors, analysts should understand the composition of the risk-free rate and consider the data influencing U.S. Treasury Bond yields. This article analyzes the criteria for evaluating the risk-free rate for use in engagements involving business valuations and economic damages. The general notion of a “risk-free rate” is the return available as of the valuation date on a security that the market generally regards as free of the risk of default.[1] U.S. Treasuries have fit this profile for decades, providing minimum, safe alternatives for risk-averse investors. They also provide a…

  • Litigation Consulting - QuickRead Top Story

    Discount Rates for Lost Profits

    July 2, 2024

    A Question of Facts and Varying Rates “How could an expert apply such a high or low discount rate to a stream of future lost profits and the court find it acceptable?” This article highlights my research looking into discount rates for lost profits and why there are so many variations of a theme when it comes to making such a calculation. When attending professional conferences, I enjoy talking with other experts involved in the litigation support field. During almost every discussion regarding commercial damages (lost profits or business destruction), there is a comment about the discount rate applied for…

  • Litigation Consulting - QuickRead Top Story

    Lost Profits and Discount Rates

    March 11, 2020

    What Do the Courts Want? Finding the methodology for determining the appropriate discount rate in a lost profits case can be a convoluted journey. The numerator (the lost profits) may be adjusted through modeling. The denominator (the discount rate) may be a risk-free rate, a rate of return on investments, or the rate of return commensurate with generating the lost profits had no wrongful act occurred. And, whether modeling is used to adjust the lost profits will impact the risk premia that affects the discount rate. Experts must review the facts of each assignment and apply an approach which they…

  • QuickRead Featured - QuickRead Top Story - Valuation/Appraisal

    How Not to Use Duff & Phelps Data

    July 2, 2019

    A Discussion of Rover Pipeline, LLC v. 10.55 Acres of Land, More or Less, in Ashland County, Ohio, et al. “In God we trust. All others must bring data.” This famous saying has been attributed to various people, but it implies that when data is presented, the conclusion can be trusted. However, the Ohio District Court’s decision in Rover Pipeline, LLC v. 10.55 Acres of Land, More or Less, in Ashland County, Ohio, et al., demonstrates that data is only trustworthy if it is understood and applied correctly. The case, in which the expert’s valuation report was discarded due in…

  • QuickRead Top Story - Valuation/Appraisal

    In re Appraisal of DFC Global

    June 27, 2018

    A Study of the Experts’ Inputs and Court Opinion How does a court go about deciding a valuation case when two experts oppose each other? The author examines the DFC Global Corporation decision to see what that reveals and how that may impact an expert’s future engagement. The author finds three takeaways for readers.

  • Litigation Consulting - QuickRead Top Story

    Chapter 11 Bankruptcy

    November 29, 2017

    Unsecured Creditors: Risk and Cramdown Rates (Part II of II) This is the second of a two-part article, read Part I here. In October 2017, the Second Circuit Court of Appeals handed down its decision on cramdown interest rates in the matter In re: MPM Silicones, LLC. This decision has already stirred a great deal of discussion regarding cramdown interest rates to be paid secured creditors in Chapter 11 bankruptcy matters. Numerous articles have appeared on-line discussing the impact of this decision. These articles follow in a long line of literature on cramdown hearings and secured creditors. Conversely, little has…

  • Litigation Consulting - QuickRead Top Story

    Chapter 11 Bankruptcy

    November 21, 2017

    Unsecured Creditors: Risk and Cramdown Rates (Part I of II) This is the first of a two-part article. In October 2017, the Second Circuit Court of Appeals handed down its decision on cramdown interest rates in the matter In re: MPM Silicones, LLC. This decision has already stirred a great deal of discussion regarding cramdown interest rates to be paid secured creditors in Chapter 11 bankruptcy matters. Numerous articles have appeared on-line discussing the impact of this decision. These articles follow in a long line of literature on cramdown hearings and secured creditors. Conversely, little has been written about impaired…

  • Litigation Consulting - QuickRead Featured - QuickRead Top Story

    Revisiting Modeling and Discounting Future Damages

    May 31, 2017

    The Case for Use of a Risk-Adjusted Rate in Damages Cases Robert Dunn and Everett Harry laid out a process for modeling and discounting future lost profits to present value in their article, Modeling and Discounting Future Damages. Not all experts agreed with the position presented by Dunn and Harry. In March, we revisited modeling and its level of acceptance. This article revisits the more controversial portion of the Dunn and Harry article, determining the discount rate. Dunn and Harry believed modeling the projected income stream reduced uncertainty and risk in an expert’s estimates. Therefore, they stated a lesser discount…

  • Mergers and Acquisitions/Exit Planning

    The Value Opportunity to Private Companies

    April 9, 2014

    Can private companies really increase their value 80-100 percent by limiting unsystematic (controllable) risks? The November/December 2013 issue of The Value Examiner featured Ken Sanginario’s article entitled, “The Valuation Business: A Strategic Road Map for Success.” In this article, Sanginario answers questions raised by skeptics to make the case that value doubling for private companies is possible.

  • QuickRead Top Story - Valuation/Appraisal

    How the Changes to the Government’s Credit Rating Impacts Discount Rates

    September 12, 2012

    The Risk-Free Rate is the Cornerstone in Finance for Estimating both the Cost of Equity and Debt Capital. In corporate finance and valuation, both academics and practitioners have long used government security (U.S. Treasury Bills and Bond) rates as proxies for risk-free rate of return. How do credit downgrades affect the risk-free rate for private company valuators? Anthony Banks explains.