TAF’s “Task Force on Best Practices in Valuation for Financial Reporting” recently announced plans to form a third working group to, among other things, examine the following questions:

1. What constitutes the benefits of “control” that would justify a fair value of a business or reporting unit greater than its market capitalization?
2. Should a control premium be applied to the present value of free cash flows in a discounted cash flow enterprise valuation? Conversely, should the benefits of control be quantified and included in the free cash flows in a discounted cash flow enterprise valuation?
3. Should a control premium be applied to the indicated fair value of a business or reporting unit derived by a market approach using guideline company valuation multiples?
4. How is the control premium quantified and applied in a market approach? Conversely, should the fair value of a business or reporting unit be estimated through the market approach using guideline transaction multiples?
5. How can the sum of the fair values of multiple reporting units be reconciled to the market capitalization of the consolidated entity?

Interested in participating? You have until the close of the business day on April 30 to download an application and submit it to Paula Douglas Seidel.