The Process of Valuation – Placing Value on Your Business
Total Page:16
File Type:pdf, Size:1020Kb
Load more
Recommended publications
-
Frs 102 Factsheet 6 Business Combinations
FRS 102 FACTSHEET 6 BUSINESS COMBINATIONS Business combinations A business combination is defined as the bringing together of separate entities or businesses into one reporting entity and may be structured in a number of ways for legal, taxation or other reasons. It may involve the purchase by an entity of the equity of another entity, the purchase of all the net assets of another entity, the assumption of the net liabilities of another entity, or the purchase of some of the net assets of another entity that together form one or more businesses. Section 19 Business Combinations and Goodwill sets out the requirements for business combinations. This section also includes the requirements for group reconstructions, however, this is not covered in this factsheet. This factsheet has been prepared to provide a high level overview to entities applying FRS 102 that undertake a business combination for the first time covering the following: • An outline of the purchase method • The separation of intangible assets from goodwill • Illustrative disclosures This factsheet has been prepared by FRC staff and provides high level guidance to entities applying FRS 102 that undertake a business combination for the first time. It should not be relied upon as a definitive statement on the application of the standard nor is it a substitute for reading the detailed requirements of FRS 102. FRS 102 Factsheet 6 1 December 2018 The Purchase Method Key FRS 102 references The purchase method is the required accounting treatment for the vast majority of business 19.6, 19.7 combinations1 and involves the following steps: 1) Identify an acquirer This is the entity which obtains control of other combining entities or businesses. -
Minority Discounts, Fair Market Value, and the Culture of Estate Taxation William S
University of Miami Law School University of Miami School of Law Institutional Repository Articles Faculty and Deans 1997 Minority Discounts, Fair Market Value, and the Culture of Estate Taxation William S. Blatt University of Miami School of Law, [email protected] Follow this and additional works at: https://repository.law.miami.edu/fac_articles Part of the Business Organizations Law Commons, and the Tax Law Commons Recommended Citation William S. Blatt, Minority Discounts, Fair Market Value, and the Culture of Estate Taxation, 52 Tax L. Rev. 225 (1997). This Article is brought to you for free and open access by the Faculty and Deans at University of Miami School of Law Institutional Repository. It has been accepted for inclusion in Articles by an authorized administrator of University of Miami School of Law Institutional Repository. For more information, please contact [email protected]. Minority Discounts, Fair Market Value, and the Culture of Estate Taxation WILLIAM S. BLATr* I. INTRODUCTION In valuing blocks of corporate stock, courts often permit a minority discount-a reduction in value that reflects the difficulty of selling shares lacking corporate control.' The allowance of minority dis- counts encourages transactions designed to reduce transfer taxes.2 Taxpayers keep property in corporate solution, sometimes in tiered holding companies,3 and gradually transfer corporate control through multiple gifts of small blocks. Long contested by the government, 4 mi- * Professor of Law, University of Miami School of Law. I would like to thank Jack Bogdanski, Mary Coombs, Joseph Dodge, Mary Louise Fellows, John Gaubatz, Pat Gudridge, Mike Livingston, Grayson McCouch, George Mundstock, Jeff Pennell, Mark Ramseyer, Jim Repetti, Tom Robinson, Deborah Schenk, Sam Thompson, and Larry Zelenak for comments on earlier drafts of this Article. -
Valuation Issues to Consider for Large Block Minority Shareholder Redemptions Jeffrey S
Shareholder Forensic Analysis Insights Valuation Issues to Consider for Large Block Minority Shareholder Redemptions Jeffrey S. Burns and Nathan P. Novak The purpose of this discussion is to identify certain issues to consider when performing a valuation analysis for the purpose of a closely held company shareholder redemption. Specifically, the focus of this discussion is on certain qualitative and quantitative factors that commonly arise when a closely held company is going through the process of redeeming or buying out an ownership interest of a significantly large but noncontrolling shareholder. Several considerations that are unique to large block noncontrolling shareholder redemptions are discussed below. Additionally, an example is provided to illustrate how certain of the issues can occur and can be handled in a hypothetical, but realistic, situation. NTRODUCTION such as if a shareholder claims he or she is being I oppressed by the company and a court orders that A shareholder redemption, as that term is used company to redeem the oppressed shareholder’s throughout this discussion, occurs when a share- shares. holder (or otherwise owner) of a company sells his or her shares back to the company. The shares may This discussion focuses on the valuation issues be retired or may be distributed among the remain- that arise during a litigious shareholder redemp- ing shareholders. tion, such as the issues related to the dissociation of an owner. Further, there are certain issues that Ultimately, the result is the same either way: are unique to the redemption of a noncontrolling 1. There will be one less shareholder. shareholder that holds a significantly large block of the company stock. -
Business Valuation Courses
The specialist in highly technical, market-driven bankingmergers and corporate & acquisitions finance trainingtraining BusinessMergers & ValuationAcquisitions Courses Courses web: redliffetraining.co.uk email: [email protected] phone: +44 (0)20 7387 4484 Advanced Negotiation Issues in M&A Date: BrochureLocation: London Content Standard Price: £*** + VAT Membership Price: £*** + VAT BOOK NOW PUBLIC COURSES Course Overview • Advanced Equity Valuation • Advanced Negotiation Issues in Financial Covenants • Advanced Negotiation Issues in M&A • Advanced Private Equity & Leverage Buy-Outs: A 5 Day Masterclass • Advanced Private Equity & LBOs Training • Advanced Takeover Code - Current Strategies & Tactics • Bank Valuation • Corporate Finance Masterclass • Corporate Finance Transactions • Equity & Debt Capital Markets • Effective Business Writing for Corporate Finance • European Term Loan “B” • How to Buy A Business • How to Sell A Business • Introduction to The Takeover Code • Joint Ventures - Key Negotiating and Structuring Issues Coursewith Content Sample Documents • Leveraged Loans in Private Equity and Corporate Transactions • Negotiating Heads of Terms (LOI/MOU) & Related Issues To book this course or find out more, please click the “Book” button Advanced Negotiation Issues in M&A Date: BrochureLocation: London Content Standard Price: £*** + VAT Membership Price: £*** + VAT BOOK NOW PUBLIC COURSES Course Overview • Tax Issues in M&A • The M&A Course • Modelling for M&A Course • Private Equity & MBO • The SPA Course - Commercial -
Investment Banking
NIRMA UNIVERSITY Institute of Management Master of Business Administration (Full Time) Programme/ Integrated Bachelor of Business Administration-Master of Business Administration Programme/ Master of Business Administration (Family Business & Entrepreneurship) Programme L T PW C 3 - - 3 Course Code MFT5SEEF17 MBM5SEEF17 MFB5SEEF18 Course Title Investment Banking Course Learning Outcomes (CLO): At the end of the course, students will be able to: 1. Interpret the managing aspects and regulations affecting of Investment Banks. 2. Develop appropriate instruments keeping in view the terms of issue of security. 3. Assess the valuation aspect and issue of various kind securities. 4. Plan the restructuring including capital restructuring of a company. Syllabus Teaching Hours Unit I: Overview of Investment Banking 04 • Basic Concepts and Definitions • Role of Investment Banking as Financial Intermediaries • Business of Investment Banking • American and Indian Investment Banks Unit II: Domestic Issue Management 06 • Dynamics of primary market • Listing requirements and procedure • Raising funds through IPO • Methods of bringing out an IPO, and IPO Pricing • Due diligence process Unit III: Restructuring, Underwriting and Ancillary Services 09 • Structured products and risk management advisory • Financial Restructuring Services • Corporate Debt Restructuring (CDR) • Underwriting Services, Business Model of Underwriting, Underwriting Commissions, Devolvement and Green Shoe Option • Issuing ADR, GDR and IDRs • Arranging for Buyback and Delisting of Shares Unit IV: Investment Banking and Business Valuation 07 • Various valuation models applied in estimating value of the firm and value of equity • Merits and Limitations of each models/methods of valuation • Valuing Private Equity and Venture Finance Unit V: Issues facing Investment Banks 04 • Designing new financial instruments • Adoption of Blockchain in Investment Banks • Data Security • Other Issues Suggested Readings: 1. -
A FAMILY LIMITED PARTNERSHIP (FLP) VALUATION EXAMPLE By
A FAMILY LIMITED PARTNERSHIP (FLP) VALUATION EXAMPLE A FAMILY LIMITED PARTNERSHIP (FLP) VALUATION EXAMPLE A FAMILYBy: LindaLIMITED B. Trugman,PARTNERSHIP CPA/ABV, (FLP) MCBA, VALUATION ASA, MBA EXAMPLE By: Linda B. Trugman, CPA/ABV, MCBA, ASA, MBA By: Linda B. Trugman, CPA/ABV, MCBA, ASA, MBA Family Limited Partnerships (FLPs) have grown in popularity as an estate planning tool and a way to depress transferFamily Limited tax values. Partnerships Business (FLPs) valuation have grownexperts in popularity should be as aware an estate of the planning issues tool involved and a wayin valuing to depress FLP transferFamily Limited tax values. Partnerships Business (FLPs) valuation have grownexperts in popularity should be as aware an estate of the planning issues tool involved and a wayin valuing to depress FLP transferinterests taxand values. how to prepare Business a report valuation that isexperts less likely should to be be challenged aware of by the the issues Internal involved Revenue in Servicevaluing (IRS)FLP or,interests if challenged, and how will to preparemore likely a report be resolved that is less in favor likely ofto thebe challengedtaxpayer. by the Internal Revenue Service (IRS) or,interests if challenged, and how will to preparemore likely a report be resolved that is less in favor likely ofto thebe challengedtaxpayer. by the Internal Revenue Service (IRS) or, if challenged, will more likely be resolved in favor of the taxpayer. Valuation analysts need to do more than focus on what discounts they can use to reduce the value of a FLP Valuation analysts need to do more than focus on what discounts they can use to reduce the value of a FLP Valuationinterest. -
Application of Minority Discount and Control Premium in Business Valuation: Estonian Evidence
View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by DSpace at Tartu University Library UNIVERSITY OF TARTU School of Economics and Business Administration Raivo Pleer APPLICATION OF MINORITY DISCOUNT AND CONTROL PREMIUM IN BUSINESS VALUATION: ESTONIAN EVIDENCE Supervisor: Associate Professor in Finance Priit Sander Co-supervisor: Assistant in Finance Mark Kantšukov Tartu 2020 Olen koostanud töö iseseisvalt. Kõik töö koostamisel kasutatud teiste autorite tööd, põhimõttelised seisukohad, kirjandusallikatest ja mujalt pärinevad andmed on viidatud. Raivo Pleer 2 TABLE OF CONTENTS TABLE OF CONTENTS .................................................................................................. 3 Abstract ............................................................................................................................. 4 Introduction ....................................................................................................................... 5 1. REVIEW OF LITERATURE ................................................................................... 9 1.1. Minority discount and control premium ............................................................. 9 1.2. Valuation approaches ....................................................................................... 18 1.3. Factors influencing minority discount and control premium ........................... 23 2. DATA AND METHODOLOGY ............................................................................ 25 3. RESULTS AND -
Preparing a Venture Capital Term Sheet
Preparing a Venture Capital Term Sheet Prepared By: DB1/ 78451891.1 © Morgan, Lewis & Bockius LLP TABLE OF CONTENTS Page I. Purpose of the Term Sheet................................................................................................. 3 II. Ensuring that the Term Sheet is Non-Binding................................................................... 3 III. Terms that Impact Economics ........................................................................................... 4 A. Type of Securities .................................................................................................. 4 B. Warrants................................................................................................................. 5 C. Amount of Investment and Capitalization ............................................................. 5 D. Price Per Share....................................................................................................... 5 E. Dividends ............................................................................................................... 6 F. Rights Upon Liquidation........................................................................................ 7 G. Redemption or Repurchase Rights......................................................................... 8 H. Reimbursement of Investor Expenses.................................................................... 8 I. Vesting of Founder Shares..................................................................................... 8 J. Employee -
FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9CS and FR Y-9ES; OMB No
Supporting Statement for Financial Statements for Bank Holding Companies (FR Y-9C, FR Y-9LP, FR Y-9SP, FR Y-9CS and FR Y-9ES; OMB No. 7100-0128) Summary The Board of Governors of the Federal Reserve System, under delegated authority from the Office of Management and Budget (OMB), proposes to revise, without extension,1 the following mandatory reports for implementation in March and June 2009. (1) the Consolidated Financial Statements for Bank Holding Companies (FR Y-9C; OMB No. 7100-0128) and (2) the Parent Company Only Financial Statements for Small Bank Holding Companies (FR Y-9SP; OMB No. 7100-0128). This family of reports also contains the following mandatory reports, which are not being revised: (1) the Parent Company Only Financial Statements for Large Bank Holding Companies (FR Y-9LP; OMB No. 7100-0128), (2) the Financial Statements for Employee Stock Ownership Plan Bank Holding Companies (FR Y-9ES; OMB No. 7100-0128), and (3) the Supplement to the Consolidated Financial Statements for Bank Holding Companies (FR Y-9CS; OMB No. 7100-0128). Pursuant to the Bank Holding Company Act of 1956, as amended, the Federal Reserve requires bank holding companies (BHCs) to provide standardized financial statements to fulfill the Federal Reserve’s statutory obligation to supervise these organizations. BHCs file the FR Y-9C and FR Y-9LP quarterly, the FR Y-9SP semiannually, the FR Y-9ES annually, and the FR Y-9CS on a schedule that is determined when the supplement is used. The Federal Reserve proposes the following revisions to the FR Y-9C effective March 31, 2009: (1) new data items and revisions to existing data items on trading assets and liabilities, (2) new data items associated with the U.S. -
Fundamentals of Corporate Valuation
Fundamentals of Corporate Valuation Debt free cash free company valuations: what are they? Imagine a typical company which has some amount of net debt (where net debt equals debt less cash that could be applied to refinancing that debt). Imagine too that those net liabilities could magically be removed, perhaps by a magnificent benefactor or a fairy godmother – someone who could work a wonder over the company and take away its net debt. Without those net liabilities, magically the company’s value would increase. That’s the debt free cash free valuation: the value of the company imagining it had no net debt. Shares/ equity valuation vs. debt free cash free How does debt free cash free valuation compare to shares or equity value? Let’s imagine a company that has shares/ equity with a valuation of 70 million. You can see that 70 million on the right hand side of the chart below. Let’s imagine that same company had debt less cash (= net debt) of 30 million. The debt free cash free valuation would be 100 million. That’s the value on the left hand side. Equity valuation vs. DFCF 1 Equity valuations are usually higher than DFCF values For a company that has net debt (that is, where debt is greater than cash) the debt free cash free value is higher than the shares/ equity valuation for the business. You can see that in the chart above: the 100 million on the left is higher than the 70 million on the right. Working from left to right, if the owner of a company had received a debt free cash free offer of 100 million, and if net debt was 30 million, the owner would expect to receive 70 million for the shares/ equity in the business. -
IN the SUPREME COURT of IOWA No. 11–0601 Filed June 14, 2013
IN THE SUPREME COURT OF IOWA No. 11–0601 Filed June 14, 2013 JOHN R. BAUR, Appellant, vs. BAUR FARMS, INC. and ROBERT F. BAUR, Appellees. Appeal from the Iowa District Court for Madison County, Paul R. Huscher, Judge. Minority shareholder in a closely held farm corporation appeals from the dismissal of his suit alleging oppression. REVERSED AND CASE REMANDED WITH DIRECTIONS. Douglas A. Fulton and Allison M. Steuterman of Brick Gentry, P.C., West Des Moines, for appellant. David L. Charles of Crowley Fleck PLLP, Billings, Montana, and Mark McCormick of Belin McCormick, P.C., Des Moines, for appellees. 2 HECHT, Justice. A minority shareholder of a family farm corporation sued the corporation and its majority shareholder, who served as a director and officer of the corporation. The minority shareholder alleged illegal, oppressive, malicious, and fraudulent acts by the majority shareholder had resulted in waste of the corporation’s assets and constituted a breach of fiduciary duty. The minority shareholder requested dissolution of the corporation or payment of the fair value of his ownership interest. The district court dismissed the action at the conclusion of the minority shareholder’s presentation of evidence in a bench trial. The minority shareholder appeals, contending the district court erred in dismissing the action. We reverse and remand with instructions. I. Factual and Procedural Background. Baur Farms, Inc. (BFI) is a family farm corporation formed in 1966 by brothers Merritt and Edward Baur. At the time of its organization, the corporation took ownership of 1736 acres of land previously farmed by the brothers as partners. -
1 a General Introduction to Risk, Return, and the Cost of Capital
Notes 1 A General Introduction to Risk, Return, and the Cost of Capital 1. The return on an investment can be expressed as an absolute amount, for example, $300, or as a percentage of the total amount invested, such as eight per cent. The formula used to calculate the percentage return of an investment is: (Selling price of the asset – Purchase price of the asset + Dividends or any other distributions which have been paid during the time the financial asset was held) / Purchase price of the asset. If the investor wants to know her return after taxes, these would have to be deducted. 2. A share is a certificate representing one unit of ownership in a corporation, mutual fund or limited partnership. A bond is a debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. 3. In order to determine whether an investment in a specific project should be made, firms first need to estimate if undertaking the said project increases the value of the company. That is, firms need to calculate whether by accepting the project the company is worth more than without it. For this purpose, all cash flows generated as a consequence of accepting the proposed project should be considered. These include the negative cash flows (for example, the investments required), and posi- tive cash flows (such as the monies generated by the project). Since these cash flows happen at different points in time, they must be adjusted for the ‘time value of money’, the fact that a dollar, pound, yen or euro today is worth more than in five years.