... which in the
process generally improves the information that is available
to their management. Such data is frequently lacking in
smaller businesses, a fact that may hamper management’s
assessment ... Capitalists
(S&P 50 0) and Lower- Public Private Company and Smaller/
Public Cap Public Company Weaker Private
Company Company Company
10% 15% 20% 25% 30% 35% 40%
116 Income App...
... items or
nonmarket base compensation to shareholders.
Risk management techniques are also available for use in val-
uation for M& amp ;A. Most commonly these involve traditional statisti-
cal parameters ... the most accurate in assessing the cost of capital for a
business and gauging general company and market risk, additional
risk analysis tools are available. M& amp ;A invest...
... that
suggest a company will maintain its competitive advantages for-
ever. For example, in an industry that is growing at an annual rate
of 3%, an SPCM or MPDM computation that includes a long-term
growth ... tar-
get, MCAPM may be an acceptable methodology. When this data
is available, a beta for the target company is derived from the be-
tas of the guideline companies. In t...
... ABV, of American Business Appraisers, San Francisco, Cali-
fornia; email: mjeaba@pacbell.com.
240 Measuring and Managing Value in High-Tech Start-Ups
and margins must be scrutinized carefully. ... of value. In the
merger and acquisition (M& amp ;A) world, however, much of the real
action takes place after stand-alone fair market value and invest-
ment value have been determined. St...
... Merger and Acquisition Valuation Case Study
management. Marketing management is lacking, and senior
management is generally thin.
Proprietary Customer Knowledge
Cardinal’s market research has revealed ... level and
enthusiasm for the day-to-day challenges of the company are de-
clining, and Cardinal is facing substantial increased competition
from full-line “media” companies. Much of thi...
... the
valuation of companies. A must read!”
Steven F. Schroeder, JD, ASA, FIBA, MCBA
Economic and Valuation Services
Richard M. Wise, FCA, FCBV, ASA, MCBA
Wise, Blackman, CA
Jay Fishman, ASA
Principal
Kroll ... some but not all of its financing
costs. So capital providers are left uninformed about their
real cash return.
VALUATION FOR M& amp ;A
Building Value in
Private...
... valuing a company for merger and acquisi-
tion, performance improvement, or any other reason, competitive
analysis is an essential step.
Many people see valuation as primarily a financial calcula-
tion. ... timeliness of accounting information
and internal control
Although business valuation involves many financial calcula-
tions, it is not primarily a financial activity, particul...
... results in a more thorough and accurate analysis.
While larger companies have M& amp ;A or business development
departments, those that lack this capacity internally may have to
add external legal, tax, ... investment value of the target but not its fair
market value. The combination also may lower the combined en-
tity’s financing costs and may allow for efficiencies in lease...
... performance or financial position may dis-
close different information about the target company. Market data
and company performance may allow use of only certain multi-
ples. For example, in ... Weighted Average Cost of Capital
Large Mid-Cap to Larger/stronger Venture capitalists and
Cap Micro-Cap private company smaller/weaker
(S&P private company
50 0)
5% 10% 15% 20% 25% 30%...
... approach, adjustments for
182 Asset Approach
5. Ending point. From the adjustments, prepare a balance sheet
that reflects all items at market value. From this amount,
determine the adjusted value ... be
considered for each value indicated because adjustments that are
appropriate for one indicated value may not apply to another. This
point is emphasized because a common error...