Preliminary Look: Valuation Issues with Bailed Out Companies

BVResearch Pro
American Society of Appraisers Business Valuation Review™
Summer 2009 Volume 28, Issue 2 pp. 100-104
Donald Sonneman, ASA


At this point in time, a new category of public companies is emerging. Companies that are receiving bailout funds are operating alongside counterparts that continue to operate based on the normal supply and demand forces for the industry. Clearly, there are many differences between a company receiving bailout funds and its traditional counterpart. The purpose of this article is to: (a) identify and discuss the major differences and (b) indicate where these differences might alter or influence valuation approaches. The income approach could consider both bailout and postbailout phases. The market approach focuses on transaction data for companies with lower than normal performance. Since bailed out companies are a very recent phenomenon, there are no well established answers to these issues. So this is intended as a preliminary discussion.
Preliminary Look: Valuation Issues with Bailed Out Companies
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