Principles of Private Firm Valuation
105 Estimating the Value of Control CHAPTER 7 I n their control premium study, Houlihan Lokey Howard and Zukin define a control ...
two sets of circumstances: The first is measuring the value of control when the buyers and competitive sellers are known with so ...
107 TABLE 7.1 Takeovers Private Target Takeovers Public Target Takeovers Method of Payment Stock Cash Mixed Stock Cash Mixed Tot ...
sure is that owners of private firms have quite legitimate ways to reduce the size of reported earnings and thereby lower report ...
mium paid? Ang and Kohers estimated a regression model that attempts to isolate the various factors that influence the premium p ...
110 TABLE 7.2 Cross-Sectional Regressions: Factors Explaining the Premium for Privately Held Targets and the Market Response for ...
exchange for contracting with a less risky buyer. Hence, under the condition that the seller is affiliated with the buying firm ...
112 PRINCIPLES OF PRIVATE FIRM VALUATION TABLE 7.3 Target Characteristics Panel A:Panel A provides details on levels of family o ...
premiums paid for equivalent public firms irrespective of how the acquisi- tion is financed. ■ Private firm premiums can be 100 ...
premium studies as the best estimate, since the information needed to obtain a more informed estimate, namely, who the buyers ar ...
Business as usual means that management expects to run the firm in the future as it has in the past. Category 1 is distinguished ...
position of the target firm’s distribution of valuation outcomes. Here, the probabilities associated with different valuation ou ...
mined without knowing who the buyer happens to be since its value depends only on the risks and opportunities inherent in the bu ...
around the valuation date? Does this mean that a veterinary practice that just comes on the market should command no control pre ...
owner decided to increase his salary such that there was no cash flow to dis- tribute to the recent graduate? What recourse woul ...
synergies could be worth as much as $200. Remember that the present value of the veterinary practice’s cash flows under current ...
T=time to expiration of the option (which varies with the type of option being considered) r=the risk-free interest rate with a ...
control option is 12 months. The measure of volatility required by option pric- ing models is the standard deviation of asset re ...
firm management has been successful in implementing similar synergistic strategies in the past, then the return volatility will ...
control and the control premiums actually paid. If so, this would indicate, although not prove, that an option pricing model is ...
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