Elements of the build-up approach. The build-up approach was introduced in the reading on return concepts. When guideline public companies (public-company comparables for the company being valued) are not available or of questionable comparability, appraisers may rely on a build-up method rather than the CAPM or other models. The build-up method is similar to the expanded CAPM but excludes the application of beta to the equity risk premium. Many view betas that are different from 1.0 as substantially reflecting industry risk factors and thus do not include an industry risk premium in the expanded CAPM. In the build-up model, in which beta is implicitly assumed equal to 1.0, an argument exists to include an industry risk adjustment (premium or discount), although there are challenges in measuring industry risk adjustments. As the baseline implementation of the build-up model, we take the model with an industry risk adjustment.
Institute, CFA. 2015 CFA Level II Volume 4 Equity. Wiley Global Finance, 2014-07-14. VitalBook file.
The citation provided is a guideline. Please check each citation for accuracy before use.
I’d say, small and private => use the Indy Risk