On the BVR LinkedIn page, there’s a spirited discussion surrounding The Appraisal Foundation’s recent discussion draft on control premiums. “Control premiums for most [publicly traded] companies either do not exist or are quite small,” says the draft, The Measurement and Application of Market Participant Acquisition Premium, which is available on TAF’s website.
“I disagree emphatically,” says Lance Hall (FMV Opinions), who started the LinkedIn discussion thread. He’s written a 5,000-word rebuttal in the form of a letter to TAF, which can be accessed from the BVR LinkedIn page.
A slew of comments have rained down from those who agree with Hall and those who don’t. “Your letter is well crafted and loaded with clearly stated rebuttals,” says one commenter. But another says: “Do you have any evidence or rigorous logic to support your theory?” Another commenter pointed to Dr. Aswath Damodaran’s paper on the subject, which states the value of control in and of itself (apart from ability to improve NPV) is "zero or negligible." Hall responds: “Unfortunately, Dr. Damodaran has it very, very wrong.”
Read for yourself: Valuation professionals should read Hall’s letter and join in the discussion. We also are interested in hearing how TAF responds. The organization solicited comments on the discussion draft and announced that it would respond accordingly.