Chapter 16 • Small businesses
(b) Suggest a suitable price per share for each of the following possible transactions:
(i) The purchase of 500 shares by one manager from another manager. The
shares represent each manager’s only holding of the shares.
(ii) The purchase of the entire share capital by a conglomerate.
Your suggested prices should be explained and justified.
(c) (i) Outline any additional information that would enable you to make a more
informed valuation.
(ii) Outline any alternative valuation methods that could have been used had more
data been available.
(iii) Outline the general problems of valuing shares in unlisted businesses.16.6 Opus Soft Drinks Ltd (‘Opus’), an unlisted business, produces a range of mineral
waters, mixers and fruit juices. Opus was formed in the 1980s by a consortium of
listed brewery businesses to supply soft drinks for sale in their tied public houses and
hotels. Opus makes about 20 per cent of its sales to customers other than members
of the consortium.
At present Opus’s ordinary shares are owned as follows:%
Great Northern Breweries plc (‘GNB’) 40
Peterstones Holdings plc 20
Heritage Ales plc (‘Heritage’) 15
Woodhall and Smith plc 15
Anchorage Brewery plc 10Heritage wishes to sell its shares in Opus, and GNB has agreed to buy all of these,
subject to a reasonable price being agreed.
Opus’s latest annual report contained financial statements that can be summarised
as follows:Income statement for the year ended 30 September last year
£m
Sales revenue 52.3
Cost of sales (30.9)
Gross profit 21.4
Net operating expenses (18.4)
Operating profit 3.0
Interest (0.5)
Profit before taxation 2.5
Taxation (0.7)
Profit for the year 1.8Depreciation of non-current assets for the year totalled £2.4 million.
The business declared a dividend of £0.7 million for last year.