Business Valuation Discounts and Premiums
SECOND EDITION
Discounts and premiums do not just affect the value of a company; they play a crucial role in influencing a host of other factors and conditions that can make or break a deal. When it comes to business valuations, it's the business appraiser's responsibility to be intimately knowledgeable with every aspect of discounts and premiums: the different types, the situations when they may or may not apply, and how to quantify them.
In this newly updated edition of Business Valuation: Discounts and Premiums, Shannon Pratt--one of the nation's most recognized and respected business valuation consultants--brings together the latest collective wisdom and knowledge about all major business discounts and premiums.
Addressing the three basic approaches to conducting a valuation--the income approach, the market approach, and the asset approach--Shannon Pratt deftly and logically details the different discounts or premiums that may be applicable, depending on the basic valuation approach used, and how the valuation approaches used affect the level.
Clearly written and thorough, Business Valuation: Discounts and Premiums, Second Edition provides business appraisers, accountants, attorneys, and business owners with an arsenal of information for their professional toolkit that can be applied to every major evaluation case they might face in any deal.
This updated edition features timely, comprehensive coverage on:
* Strategic acquisitions
* Extensive empirical data
* Pre-IPO marketability discount studies
* Merger and acquisition negotiations, empirical evidence from completed transactions, and positions taken by courts in litigations
* Strategic acquisition premiums
* Studies on minority discounts
Detailed, authoritative, and complete in its coverage, Business Valuation: Discounts and Premiums, Second Edition gets to the core of one of the more complex challenges faced by business appraisers, and arms readers with the understanding and techniques needed to successfully meet and exceed their job expectations.
Autorentext
SHANNON P. PRATT, CFA, FASA, MCBA, CM&AA, is the Chairman and CEO of Shannon Pratt Valuations, Inc., a premier business valuation firm, and is the founder and Editor Emeritus of Business Valuation Resources, LLC. Over a distinguished career of close to four decades, he has performed valuation engagements for M&A, ESOPs, gift and estate taxation, marital dissolution, shareholder oppression and dissent, and numerous other purposes. He has conducted many fairness and solvency opinions, has testified in a wide variety of federal and state courts across the country, and frequently participates in arbitration and mediation proceedings. Dr. Pratt is one of the most successful and respected authors in his field.
He is the author or coauthor of several industry standards, including The Market Approach to Valuing Businesses, Standards of Value, Business Valuation and Taxes, Cost of Capital, Business Valuation Body of Knowledge, all published by Wiley, as well as PPC's Guide to Business Valuation, Valuing a Business: The Analysis and Appraisal of Closely Held Companies, Valuing Small Businesses and Professional Practices, and The Lawyer's Business Valuation Handbook.
Zusammenfassung
Business Valuation Discounts and Premiums
SECOND EDITION
Discounts and premiums do not just affect the value of a company; they play a crucial role in influencing a host of other factors and conditions that can make or break a deal. When it comes to business valuations, it's the business appraiser's responsibility to be intimately knowledgeable with every aspect of discounts and premiums: the different types, the situations when they may or may not apply, and how to quantify them.
In this newly updated edition of Business Valuation: Discounts and Premiums, Shannon Pratt—one of the nation's most recognized and respected business valuation consultants—brings together the latest collective wisdom and knowledge about all major business discounts and premiums.
Addressing the three basic approaches to conducting a valuation—the income approach, the market approach, and the asset approach—Shannon Pratt deftly and logically details the different discounts or premiums that may be applicable, depending on the basic valuation approach used, and how the valuation approaches used affect the level.
Clearly written and thorough, Business Valuation: Discounts and Premiums, Second Edition provides business appraisers, accountants, attorneys, and business owners with an arsenal of information for their professional toolkit that can be applied to every major evaluation case they might face in any deal.
This updated edition features timely, comprehensive coverage on:
- Strategic acquisitions
- Extensive empirical data
- Pre-IPO marketability discount studies
- Merger and acquisition negotiations, empirical evidence from completed transactions, and positions taken by courts in litigations
- Strategic acquisition premiums
- Studies on minority discounts
Detailed, authoritative, and complete in its coverage, Business Valuation: Discounts and Premiums, Second Edition gets to the core of one of the more complex challenges faced by business appraisers, and arms readers with the understanding and techniques needed to successfully meet and exceed their job expectations.
Inhalt
List of Exhibits xv
About the Author xix
About the Contributing Authors xxi
Foreword xxv
Preface xxvii
Acknowledgments xxix
1 Overview of Business Valuation Discounts and Premiums and the Bases to Which They Are Applied 1
Discounts and Premiums Are Big-Money Issues 2
''Entity Level'' versus ''Shareholder Level'' Discounts and Premiums 3
How the Valuation Approaches Used Affect the Level of Value 8
Use of Public Company Data to Quantify Discounts and Premiums 9
How the Standard of Value Affects Discounts and Premiums 10
American Society of Appraisers Business Valuation Standard VII:Valuation Discounts and Premiums 12
Summary 13
2 Minority Discounts and Control Premiums 15
Relevant Definitions 16
Basic Minority/Control Value Relationship 16
Prerogatives of Control 17
Factors Affecting Degree of Control 18
How the Valuation Methodology Affects the Minority Discount or Control Premium 25
Do Publicly Traded Minority Stock Prices Reflect Control Value? 29
Treatment of Control Premiums in the Delaware Courts 35
How the Purpose of the Valuation Affects Minority Discounts or Control Premiums 37
Summary 38
3 Empirical Data Regarding Minority Discounts and Control Premiums 41
Premiums Paid in Acquisitions 41
Identifying Industries with Higher or Lower Control Premiums 62
Caveats Regarding Use of Control Premium Data 63
Are Control Premiums Too High? 65
Percentage Discounts from Net Asset Value 66
Summary 66
4 Minority Discounts and Control Premiums in the Courts 68
Gift, Estate, and Income Tax Cases 70
Discounts for Lack of Control in Employee Stock Ownership Plan Cases 74
Dissenting Shareholder Cases 75
Shareholder Oppression Cases 80
Marital Dissolution Cases 80
Bankruptcy Case 82
Summary 82
5 Discounts for Lack of Marketability for Minority Interests: Concept and Evidence 86
Public Market Benchmark for Marketability 86
Empirical Evidence to Quantify Discounts for Lack of Marketability 87
Restricted Stock Studies 88
PreInitial Public Offer…