Best Practices Regarding Control Premiums: Comments Regarding the Appraisal Foundation's Proposed White Paper on Control Premiums

BVResearch Pro
American Society of Appraisers Business Valuation Review™
Winter 2011 Volume 30, Issue 4 pp. 140-143
Eric W. Nath, ASA

Summary

After everything that has been written over the last 20 years on the topic of control premiums, it is surprising that so many business valuers still cannot understand why public company shares do not trade as minority interests, and why it is bad practice to add a control premium when valuing a private company using public company data. This paper will further the arguments against control premiums with new observations that will extend and clarify these concepts. The conclusion of this paper will discuss the dangers of a Daubert challenge if one is applying control premiums, in both an accounting and financial reporting context as well as in more general cases.
Best Practices Regarding Control Premiums: Comments Regarding the Appraisal Foundation's Proposed White Paper on Control Premiums
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