Auditors who want to produce a reliable business valuation, including the cost of capital and beta factors, need a large amount of valid data. To obtain this data, it is useful to access special databases. There is a wide range of databases available, from the USA to Europe, and from those that are free of charge to those that are not.
The question is therefore which database is best suited to your own purposes. In this article, we aim to provide an overview and compare the factors that are essential for a decision, regardless of the investment required:
Until a few years ago, auditors had no choice:
Anyone who wanted to use the cost of capital and beta factors for business valuation had to turn to one of the large US providers. These provide high-quality valuation data as a by-product of their huge data pool.
Nevertheless, these databases are not universally suitable. This is because their use requires highly professional knowledge that is not available in every auditing firm.
There are now a number of providers that focus exclusively on valuation data. Due to this specialization, they often offer a more intuitive user experience. In addition, they can score points when it comes to the price-performance ratio.
In the following overview, we compare the databases of providers that are generally suitable for business valuations by auditors. With the exception of the free offers from Yahoo Finance and the database from Prof. Damodaran, an annual fee is charged for the use of the databases.
Bloomberg is based in New York and is one of the world's largest media companies. The amount of data provided by Bloomberg is huge and goes far beyond key figures such as cost of capital and beta factors. The database requires a great deal of specialized knowledge to use, which makes it rather difficult for those who are not used to it.
Capital IQ is a platform from Standard & Poor's / S&P Global. With a global focus, it offers an enormous pool of financial data and profiles of numerous companies. This platform also offers much more than data for business valuation, which is why the database is very complex to use.
Refinitiv is a subsidiary of the London Stock Exchange Group. The company describes itself as one of the world's largest providers of financial market data, and the scope of its data is correspondingly large. Like Bloomberg and Capital IQ, Refinitiv also provides far more data than is needed for the business valuation process. This is at the expense of usability, which is rather difficult to classify.
Infront Analytics is a European service provider based in Paris, France. The company describes itself as a leading provider of solutions for company valuation and equity research. The amount of data provided is large, and the database is not overly complex to use, but rather in the medium range.
Kroll is an American company that focuses on the US capital market. The provider's areas of expertise include business valuation, which is why the database is geared precisely to this purpose. However, compared to other providers, the scope of the data is rather limited.
KPMG Valuation Data Source provides a medium-sized database. It focuses on the topic of valuations and allows users to set a range of customizable filters to determine the weighted average cost of capital (WACC).
smartZebra is a Berlin-based company that provides its customers with the highest quality capital market data. The database impresses with its large data volume and excellent usability. If you want to quickly and efficiently determine the cost of capital and beta factors, you will find the right solution here.
Yahoo Finance is a US company that offers its users free access. However, there is no relevant data for professional use, which is why the offer is less suitable for auditors.
Aswath Damodaran is a professor of finance at the Stern School of Business at New York University. He is considered one of the leading experts in valuations; however, the data he provides is too rough for a valuation report, as the valuation date, for example, cannot be set individually. In addition, the data is sector data (not individual peer groups) and the data is not accessible via a database, but via various Excel files.
The "big" database solutions from providers such as Bloomberg, Capital IQ or Refinitiv will continue to be used by larger auditing firms – provided that the necessary in-depth knowledge for their efficient operation is available.
But more compact solutions also have their market – they are not only more affordable, they also focus on data for the solid evaluation of companies. Auditors will also quickly become familiar with the databases of specialized service providers due to their practical usability.
We support you in researching the data — e.g. putting together the peer group — with a short training session on how to use the platform. We are happy to do this based on your specific project.
