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Tales From the Trenches: The Case of the 70% Equity Interest Valued as a Minority

Don’t assume a 70% interest represents a majority for valuation purposes. This is the latest in our series of articles from veteran appraisers based on actual engagements.

Acquisition Premiums Amid Added Complexity in Market Transactions

In a fair value setting, while the acquisition premium (known also as a control premium) has been identified as a significant variable, its application and value measurement remain less well understood than the traditional components of acquisition finance.

Control Premiums and Deal Flow Analyzed in 2019 Mergerstat Review

This is an M&A year in review, highlighting the trends in multiples and sector analysis through the 12,008 transactions of 2018, the sixth most acquisitive year in history. Includes a discussion of the most notable transaction, a twist on a notable cancellation, analysis on the industrial services sector, and the trend in premiums.

Meanwhile, the global value of control trends down slightly during Q1 2019

BVR has completed its latest quarterly update to the FactSet Mergerstat/BVR Control Premium Study (CPS), which includes an added 141 controlling acquisitions worldwide.

Hayler proposes pretax ‘shorthand’ for some financial reporting valuations

Richard Hayler (Deloitte), fellow of the ICAEW, offers a ‘formula for finite life project cashflows’ that modifies earlier models to achieve ‘a more realistic assumption set.’

What is acquiring control worth in the UK?

Quite a bit, it turns out—30%. Current data (including Q1 2019 updates) from the FactSet Mergerstat/BVR Control Premium Study (CPS), show that UK buyers value the future benefits of controlling interests higher than nearly anywhere else in the world.

How much is business control worth?

A new control premium study published in M&A Review examines 589 takeover premiums of closed European transactions that occurred between 2005 and 2016.

Updated research on global risk premiums and risk-free rate

In some European countries, it appears there is much more disagreement about the risk-free rate (RF) than the market risk premium (MRP), according to a new survey.

Acquisitions of private firms up 12% in 2018

The number of announced acquisitions of privately owned companies increased from 7,793 in 2017 to 8,761 in 2018 (a 12% increase), reveals the soon-to-be-released 2019 Mergerstat Review.

Business Valuation Update Yearbook, 2019 Edition

February 2019 Hardcover, PDF

BVR (editor)

Business Valuation Resources, LLC

BVR has you covered with the Business Valuation Update Yearbook 2019. This newest edition from the publishers of Business Valuation Update covers the year’s most groundbreaking and thought-provoking advancements in business valuation, and more. This critical desktop reference keeps you ahead of your peers with on-the-ground reporting from valuation experts, thought-leaders, and BVR’s editorial team. Learn more >>

Business Valuation Case Law Yearbook, 2019 Edition

February 2019 Hardcover, PDF

BVR (editor)

Business Valuation Resources, LLC

The Business Valuation Case Law Yearbook, 2019 Edition is essential for business appraisers and attorneys who want to stay ahead of their peers on the most important legal issues brought up in business valuation-related cases. With in-depth analysis from BVR’s legal team, the lessons learned in this book help appraisers reach better and more defensible valuation conclusions. And, attorneys who retain appraisers as financial experts learn how their experts can help them win (or lose) in court.  Learn more >>

Rethinking the Traditional Levels of Value—Continuing the Conversation

While the representation of a hierarchy of value has served generations of business valuers well, it now needs to be reshaped. One concern is that the hierarchy has at its core the concept of the control premium, a concept that has become strained beyond the breaking point.

Major Changes Enhance the 2018 Edition of Mergerstat Review of M&A Activity

The recently released 2018 edition of Mergerstat Review has a number of important changes, including updates to historical data, new tables that show premiums paid over the targets’ enterprise values, and more.

Using Option Pricing Models to Quantify Discounts for Lack of Marketability

Many valuation professionals struggle with applying option pricing models to estimate discounts for lack of marketability (DLOM). With multiple option pricing models including European put options, shout put options, look-back put options, Asian put options, forward-starting put options, and perpetual exchange options, there is complexity that cause many to steer clear of options for purposes of estimating DLOM. Josh Angell clearly and practically explains the theoretical basis for the option models, as well as explores ...

How did surging stock prices affect M&A premiums all buyers paid in 2017?

How did surging stock prices affect M&A premiums all buyers paid in 2017? The Mergerstat Review highlights acquisition premiums paid using the seller’s five-day stock price prior to the announcement of the transaction, or essentially the premiums based on the equity value of the seller. Looking at the trends across all transactions, the numerous tables and charts in the Mergerstat Review show that premiums have steadily declined in most of the past five years.

How high were M&A premiums last year? See the five highest premiums offered

Discover how far last year’s M&A buyers were willing to go above the publicly traded share value with their offers. View a list of the five highest premiums offered for M&A transactions announced in 2017.

Liquidity and Private Placement Discounts in the TARP Preferred Stock Auctions

The liquidity discounts in the first 72 Troubled Asset Relief Program (TARP) auctions of preferred stock averaged 9.6%. The liquidity discounts were significantly lower for publicly held banks and banks that had never missed a bailout dividend. In addition, auction yields were significantly higher, 152 basis points higher, in private placements open only to accredited investors. This paper develops two different valuation frameworks based on accounting: call report data to estimate the yields and present ...

Determining the Cost of Blockage by the Market-Derived Blockage Discount Model

Using option models to determine blockage discounts has been a common practice for over 20 years. As with any technique, periodic updating and improvement is to be expected. We hope this article contributes to this end. The Market-Derived Blockage Discount Model presents a mathematical means for determining the appropriate selling period in a blockage “dribble out” analysis. If we sell too much at one time, the price impact is too great. If we create too ...

New research refutes notion of private-company discounts

There is no evidence that unlisted firms sell at discounts compared to listed firms, according to a new paper.

Letter to the Editor of BVWire re: control premiums

Your recent announcement about the 13th Annual Fair Value Conference in Los Angeles may leave unwary readers with the impression that the MPAP guidance on control premiums in VFR #3 applies to all business valuation work.

Time to rethink the control premium

When you use the guideline public company method, do you always apply a control premium?

New Mergerstat edition includes premiums over EV

Users of the 2018 Mergerstat Review will be happy to see that four new tables focus on premiums paid over the targets’ enterprise values.

Control premium advisory revisited

A member of the working group involved in the creation of Valuations in Financial Reporting Valuation Advisory 3: The Measurement and Application of Market Participant Acquisition Premiums, issued by The Appraisal Foundation, has written an article that reiterates the findings of the advisory.

Business Valuation Case Law Yearbook, 2018 Edition

February 2018 Hardcover, PDF

BVR (editor)

Business Valuation Resources, LLC

The Business Valuation Case Law Yearbook, 2018 Edition is essential for business appraisers and attorneys who want to stay ahead of their peers on the most important legal issues brought up in business valuation-related cases. With in-depth analysis from BVR’s legal team, the lessons learned in this book help appraisers reach better and more defensible valuation conclusions. And, attorneys who retain appraisers as financial experts learn how their experts can help them win (or lose) in court.  Learn more >>

Business Valuation Update Yearbook, 2018 Edition

February 2018 Hardcover, PDF

BVR (editor)

Business Valuation Resources, LLC

BVR has you covered with the Business Valuation Update Yearbook 2018. This newest edition from the publishers of Business Valuation Update covers the year’s most groundbreaking and thought-provoking advancements in business valuation, and more. This critical desktop reference keeps you ahead of your peers with on-the-ground reporting from valuation experts, thought-leaders, and BVR’s editorial team. Learn more >>
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