Principles of Private Firm Valuation
125 TABLE 7.5 Control Premium, Value of Pure Control, and Value of Synergy as a Percent of Preannouncement Stock Price Sample 3 ...
The results shown in Table 7.5 are interesting, the aforementioned drawbacks notwithstanding. First, the value of pure control i ...
127 TABLE 7.6 Relationship between Reported Control Premium and the Pure Control Option Multiple R 0.479427062 R squared 0.22985 ...
The regression model indicates that there is a significant relationship between the values of the pure control option and report ...
APPENDIX 7A: ESTIMATING PRIVATE FIRM VOLATILITY Employing the option pricing model to estimate control premiums requires a measu ...
APPENDIX 7B: THE DATATABLE 7B.1 The Data Exercise Volatility Time Until Option Target Price (Standard Option Value/ Ticker Two-M ...
EACO 0.194 7/24/01 60 1.29 1.29 0.3427552 0.0362 1 0.20 0.152 FSA 0.545 3/14/00 60 49.18 49.18 0.20692364 0.0622 1 5.59 0.114 MT ...
TABLE 7B.1 (Continued) Exercise Volatility Time Until Option Target Price (Standard Option Value/ Ticker Two-Month Date Days Sto ...
133 Taxes and Firm Value CHAPTER 8 I ncome and capital gains taxes impact the value of both private and public firms. Tax regime ...
empirically demonstrates that private S firms sell for higher multiples than comparable private C corporations. This last result ...
Vi=[{(Ri−Ci) ×(1 −t) −net capXi}/(1 +ki)] +[(Ri−Ci) ×(1 −t)] ×(1 +gi)/(ki−gi)/(1 +ki) (8.2) where R=revenue C=costs i =c,s k=bef ...
level tax rate is relative to the personal tax rate. Although the result is not shown, imposing the constraint that the after-ta ...
expected rate of return on investments made by C and S are exactly equal. If this were not true, the value created by C and S wo ...
opportunities and S is capital-constrained, it follows that the value of S will be lower relative to the value of an equivalent ...
CAPITAL GAINS TAXATION AND THE VALUE OF FREESTANDING S AND C CORPORATIONS The Tax Reform Act of 1986 removed the tax benefits as ...
The 338 election assumes two transactions take place. In the first, the acquirer purchases the stock of the target for $P.In the ...
However, this benefit is almost always completely offset by the capital gain’s tax liability, as shown in Table 8.3. The tax on ...
142 TABLE 8.4 Acquisition Prices of Equivalent S and C Corporations Fact PatternStock purchase price $900.00 tc = 35% Net tax ba ...
Acquirer After-Tax CostGross cost $900.00 $950.00 $1,091.79 $900.00 $1,276.92 $1,091.79 Less tax benefits g $0.00 $162.29 $191.7 ...
the acquisition would be $900. But this would not be optimal for the acquirer. The acquirer would rather purchase TS for $950, s ...
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