Business Valuation Case Law Yearbook, 2019 Edition
February 2019 PDF
BVR (editor)
Business Valuation Resources, LLC
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 PDF
BVR (editor)
Business Valuation Resources, LLC
Business Valuation Update Yearbook, 2018 Edition
February 2018 PDF
BVR (editor)
Business Valuation Resources, LLC
Business Valuations and the IRS: Five Books In One
March 2018 Softcover (852 pages)
Michael Gregory
Birch Grove Publishing
Discount for Lack of Marketability Guide and Toolkit
May 2017 PDF
James Hitchner, Jim Alerding, Josh Angell, Kate Morris
Valuation Products & Services
Blockage and Absorption Discounts: Definition, History, and Practice
Whether in the form of the holding of publicly traded securities or other asset classes (art, real estate, personal property), significant blocks of these assets may upset the balance in their respective markets, leading to an inability to transact all in a day or reasonable time period. Blockage discounts are discussed primarily for stock holdings, whereas an absorption discount is typically applied to real estate, art, and personal property. Join experts Ed Pratesi and Dan ...
Quantifying Illiquidity Discounts Using Put Options: New Developments
Are you up to speed on the new developments in the forward-starting put option model? Dispel confusion and common misconceptions as Stillian Ghaidarov walks you through a methodology for the application of put option models. Compare with other put option models commonly used to quantify illiquidity discounts. Join this session to strengthen your conceptual understanding of the theoretical framework behind these models and gain deeper insights about their relative strengths and weaknesses. Learn how to ...
Emerging Markets for Minority Interests
Minority interest holders have been looking for easier ways to sell interests for decades. Beginning with the real estate secondary limited partnership market in the 1980s, several initiatives have been undertaken to create opportunities for both sellers and buyers. Join Christine Baker and Charlie Sheridan for a discussion on alternatives available today for a minority investor and consider whether today’s market might impact appraisers’ and valuators’ traditional views of nonmarketable, minority interests. Get a front ...
Financial Valuation: Applications and Models, + Website, 4th Edition
April 2017 978-1-119-28660-8 Hardcover (1,296 pages)
James Hitchner
John Wiley & Sons, Inc.
Damodaran updates data-rich cost of capital spreadsheets
Professor Aswath Damodaran (New York University Stern School of Business) has released new data posts and data sets updated for 2017 related to valuation and the cost of capital, including historical stock returns, implied equity risk premiums, country risk premiums, and more.
Business Valuation Case Law Yearbook, 2017 Edition
February 2017 PDF (250 pages)
BVR (editor)
Business Valuation Resources, LLC
Business Valuation Update Yearbook, 2017 Edition
February 2017 PDF (349 pages)
BVR (editor)
Business Valuation Resources, LLC
Chancery says bids in squeeze-out merger are not comparable
The Delaware Court of Chancery recently cut short a challenge to a going-private merger when it dismissed the plaintiffs' complaint. The plaintiffs unsuccessfully argued the defendants breached their fiduciary duties when they favored the controller's lower bid over a third-party bidder's higher offer.