Most valuators treat risk analysis as an afterthought — a single subjective number plugged into a formula. MainStreetOS™ treats it as a first-class analytical process with its own dedicated AI agent, a structured 15-factor scoring system, and a transparent discount rate build-up that produces defensible, auditable capitalization and discount rates.
The Company-Specific Risk Premium (CSRP) is the single most influential variable in Income Approach valuations — yet it receives the least rigorous analysis in traditional practice. We're changing that.
Each factor is scored 1–5 (Low Risk to High Risk) and multiplied by its weight. Weights sum to 100%. The weighted average produces the CSRP Premium.
Total weights across all 15 factors: 100%. Weighted average score (1–5 scale) maps to CSRP Premium (typically 3%–15% for Main Street businesses).
The CSRP feeds directly into the Build-Up Method — the industry-standard technique for constructing discount and capitalization rates for privately held businesses under USPAP, NACVA, and ASA standards.
Example rates for illustration. Actual rates are sourced from current market data (Kroll Cost of Capital Navigator) and the 15-factor risk scoring specific to the subject business.
A dedicated AI agent that performs deep-dive risk analysis — not just storing scores, but actively researching, analyzing, and explaining each risk factor before computing the CSRP.
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Risk Analysis
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BVR Report
Deep-dive risk assessment with AI-powered factor analysis
AI Factor Analysis
The agent doesn't just read scores — it analyzes the P&L data to validate them. If the broker scores Revenue Trend as "4" but the financials show declining revenue, the agent flags the inconsistency and recommends an adjustment.
Industry Intelligence
Queries Open Brain for industry-specific risk patterns. "In 12 past restaurant valuations, the average Owner Dependence score was 2.1 and the average CSRP was 8.5%." Context from your accumulated deal history informs the current assessment.
Narrative Generation
Produces a detailed risk narrative for each of the 15 factors — not boilerplate, but specific analysis referencing the subject business's actual financial data, industry conditions, and operational characteristics. This narrative goes directly into the BVR report.
The weighted average score (1.0–5.0) maps inversely to the Company-Specific Risk Premium. Lower scores = higher risk = higher premium.
Capitalization and discount rates must be based on reasonable and appropriate evidence. The appraiser must explain the basis for each component of the build-up. The CSRP cannot be an arbitrary number — it must be supported by analysis of the specific risk characteristics of the subject business.
The capitalizer/divisor and the benefit stream must be consistently defined. Professional judgment is required in determining the CSRP, but that judgment must be documented and defensible. NACVA recommends a structured, multi-factor approach to CSRP determination.
The Build-Up Method is the industry-standard framework for discount rate construction. The Risk-Free Rate, Equity Risk Premium, and Size Premium are sourced from published market data (Kroll Cost of Capital Navigator). Only the Industry Risk Premium and CSRP involve appraiser judgment.
The analyst must document the basis for all significant assumptions including the discount rate and capitalization rate. The CSRP determination should reference specific risk factors of the subject business and explain how each factor contributes to the overall premium.
15 factors. Transparent build-up. AI-validated scoring. Every rate sourced, every factor explained. Professional tier includes the full Risk Analysis Agent.