The Black/Green Build- up Summation Model is a business valuation build-up model which is used to develop a capitalisation rate which can be used to convert a stream of earnings into value. The capitalisation rate estimated from the Black/Green model is derived from the perceived risks associated with a business and as a result is considered a better measure for businesses which are too small to apply capitalisation rates developed from methods which rely on market data. The summation model’s capitalisation rate is made up of a safe rate of return (rate of return on Government bond) plus the weighted average risk premium from 6 risk areas (1. Competition 2. Financial strength 3. Management ability and depth 4. Profitability and stability of earnings 5. National economic effects, and 6. Local economic effects). The six risk premiums are ranked in different ways such as Neutral, Weak, or Strong; or No Risk, Low, Medium, High; or None, Light, Moderate, Heavy. This model is often criticised by valuation analysts on the grounds that the computation of these six risk premiums are subjective and depends on the experience of the business valuator and the risks can be ranked and quantified as High, Medium, or Low. To arrive at the fair market value of a business, valuators divide the adjusted earnings by the capitalisation rate computed from the Black/Green model. As the risk premium and the safe rate are on a pre-tax basis, the Black/Green Summation Model is applied to pre-tax earnings.