Morningstar Introduces Valuation Service for Privately Owned Businesses and Securities

CHICAGO, April 20 /PRNewswire-FirstCall/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, has launched a valuation services business that values privately owned firms and securities for purposes such as the sale of a business, estate planning, or financial reporting. Morningstar® Valuation Services leverages Morningstar's proprietary techniques for analyzing securities and the cost of capital expertise of Ibbotson Associates, a wholly owned subsidiary of Morningstar.

"Valuation consulting is a natural extension of the cost of capital research and litigation support work Ibbotson has been doing for more than 20 years," said Alfonso Ventoso, director of valuation services for Morningstar. "Our independence allows us to focus solely on business valuation, rather than merger and acquisition activity or tax and audit advice, which helps us provide purely objective results."

The new valuation consulting service covers business valuations for companies as a whole, specific securities, or intangibles across all major industries and for firms of any size. Independent business appraisals through Morningstar Valuation Services can help owners assign value for: a sale, shareholder transactions, succession planning, employee stock option plans, fairness opinions, or purchase price allocation. In addition, the team can help with financial reporting tasks, such as fair value calculation, goodwill impairment, and share-based payment. Valuations of intangibles are also available, such as patents, startups, royalty streams, and goodwill. Additionally, the valuation team continues to provide litigation support and expert witness testimony in situations where business valuations are contested.

Each valuation starts with an on-site visit from Morningstar's team of valuation practitioners, to better understand the business and its individual needs. The team completes a detailed analysis of the company compared to its competitors, which is then subjected to a rigorous in-house peer review. The analysis is based on factors such as:

• Cost of Capital—decades of Ibbotson research helps set the industry standard for measuring business risk.
• Economic Moat™—a proprietary calculation that measures a company's competitive advantage.
• Cash-Flow Cushion™—a proprietary, forward-looking ratio that measures forecasted cash flows against a firm's financial obligations.
• Distance to Default—a quantitative model that estimates the probability of a firm falling into financial distress based on the market value and volatility of its assets.

Ibbotson first published the Ibbotson® SBBI® Valuation Yearbook, an industry-standard reference book for business valuation, in 1999. Ibbotson's valuation practitioners have published numerous academic papers on cost of capital and valuation, and have served as expert witnesses in valuation-related litigation cases for more than two decades.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 350,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 4 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. The company has operations in 20 countries and minority ownership positions in companies based in two other countries.

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SOURCE Morningstar, Inc.