BVR Briefing - Control Premiums: A Deep Dive into the New Data on Invested Capital Premiums

June 2021 PDF

BVR (editor)

Business Valuation Resources, LLC

For years, the valuation profession has debated the definition of a control premium, including its distinction from an acquisition premium. What began years ago as a relatively simple question—if there is a control premium, what should it be?—now includes analyzing such concepts as invested capital premiums and equity-based premiums, transaction synergies and strategic values, marketability, and levels of control. All are key points to keep in mind throughout the quantification of a control premium, and the thinking about these premiums is different now than it was a decade ago.

This briefing, based on a recent webinar with valuation experts Timothy J. Meinhart and Nate Novak (Willamette Management Associates) puts current and best thinking into one reference. It is all you need to ensure alignment with Control Premium thought leadership. The Briefing also covers the recently improved FactSet Mergerstat/BVR Control Premium Study, historically the most reliable, comprehensive transactional database, which now provides an invested capital premium as well as the corresponding implied minority discount.

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Table of Contents

About This Briefing

Control Premiums: A Deep Dive Into the New Data on Invested Capital Premiums

Expanded, Enhanced Control Premium Study

Control Premium Equals the Power of Control

The Relationship of Control to Levels of Value

How to Value Prerogatives of Control

Control Really Comes Down to Cash Flows

The Valuation Methodology Matters

Acquisition Premiums: Do Acquirers Chronically Overpay?

Evolution of the Empirical Data

Strategic vs. Financial Transactions: What Do the Data Show?

Factoring in the Spectrum of Control

How to Use New Data on Invested Capital Premium

A Practical, Step-by-Step Process for Applying Invested Capital Premiums

Final Word on Control Premiums

Look Inside the Briefing

Control Premiums-A BVR Briefing