The valuation policy
Every judgment call in a valuation, written down once, versioned, and never adjusted for one owner.
Every judgment, written down
A valuation is full of judgment calls: which interest rate, how much extra return a small business has to offer, how likely a bad year is. In MonoBridge each of those calls is a written rule in one place, the valuation policy, with a version number. Nobody adjusts them for one owner.
What the policy holds
| Rule | What it fixes |
|---|---|
| Discount rate | The 10-year Treasury, the equity risk premium, a beta for each kind of business, four size tiers and the company-specific tests |
| States of the world | Which states exist, their weights and the basis for each |
| Persistence | How much of a company’s unusual cost structure a buyer will believe lasts |
| Adjustment classes | Which adjustments are structural and which are one-time |
| Industry medians | The table copied from the dossier for each kind of business |
| Horizon and terminal value | How long the forecast runs and how its end value is blended |
Persistence is the subtle one. If your costs run lower than the industry’s, a buyer believes some of that will last and assumes the rest drifts back toward normal. The policy says how much: half. A one-time cost, like a settlement or a recruiting fee, touches only the starting year and fades at 30% a year.
Why it is frozen
If research or rules could change quietly, two reports on the same business a month apart could differ for reasons nobody could name. So the policy changes only by a new version, and every report page carries the version it was built under.
New industry research doesn’t slip in either. The medians the engine prices with are the table written into the policy, so a dossier update can move a value only through a policy change, and the next report’s revision bridge names it by rule.
The change log
Every version is printed in the report with its date and the rules that changed. These are the sample report’s.
- The discount-rate build-up becomes a written rule
- The company-specific premium gets named tests
- State weights of 45 / 25 / 15 / 15 points, with the regulatory-gate prior taken first
- Persistence 0.5: half of the company’s own cost structure carries into the long-run margin; the rest reverts to the industry band
- Owner-specific adjustments classed as structural; one-time items as transitory
- The upside state leaves the headline; its share is spread over the operating states
- The gate prior aligned with the Robocall Mitigation Database status: 3% for a listed provider
- New customers implied at the churn measured over the same period as the growth
- The weights page prints its arithmetic
- Every diligence effect prints the engine’s figure beside the buyer’s
- An input-set stamp joins every page foot
- Replay. At each re-run the prior inputs are run through today’s engine with each superseded rule reproduced, then switched on one at a time; the change splits into method, operating results and balance sheet
- Rule order. Superseded rules are switched to today’s one at a time, so each rule’s effect is its own line
- Test. A test requires every recorded revision to reproduce with no residual
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