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What company? All depends on the industry
Thanks for the quick reply! Without releasing the name, it is a small manufacturing company (nonpublic)... For equity risk premium, I know some people use Damodarans website but I see he lists a handful you can choose from. I still don't know where I'd get size premium from however
I believe there are some specific guides (I think Duff & Phelps has a report they update every year) that will give you broad ranges for size premium based on the company's market cap or implied market cap. I would consult with your senior bankers for guidance on this. Size and liquidity discounts are definitely more art than science in my experience.
ERP can likely use 6% and just say it’s an assumption. Hard to get any more precision.
Size premium... I mean if you really want to go at it you can look up the Fama French model and use some small-minus-big beta... you could ignore it completely... or you could just make one up that seems reasonable (over 100bps is going to raise eyebrows)
Duff & Phelps has a valuation handbook is the most commonly used IMO for cost of capital stuff.
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