Due Diligence Testing of the Butler-Pinkerton Model for Company Specific Risk

The Butler-Pinkerton Model (BPM) has gained considerable attention and acceptance in the business valuation literature and support: Due diligence testing of the model and its results is required to understand the practical limitations of the BPM model and how to determine whether the model produces reliable practical results. Independent testing reveals (a) the reliability thresholds of the model are set so low as to provide meaningless company specific risk premiums and (b) that the authors' published results are inconsistent with independent testing.