Comparing Growth Rates Used in Discounted Cash Flow Valuations
Estimating growth in net cash flows is one of the key components in applying the discounted cash flow (DCF) method in valuing any company, reporting unit, or other business unit. This paper explains the underlying assumptions of the DCF method and demonstrates how to compare the most commonly used basis for estimating net cash flows (sometimes referred to as free cash flows), expected organic growth, to historic estimates of growth of the subject company and ...
Bankruptcy Court Accepts Rationale for Tax Affecting
In a fraudulent transfer case involving S corp, court says valuation should reflect that buyers of S corps would experience a reduction in the value of the corporations' earnings because of the need to pay personal income taxes on those earnings.
Use of Asset-Level Deductions Hinges on Business Strategy
State’s high court strikes down district court’s fair value determination, finding reliance on prior law prohibiting use of deductions was misguided where company pursued strategy of selling off real estate and other assets at time of triggering event.
Utah Resources International, Inc. v. Mark Technologies Corp.
State’s high court strikes down district court’s fair value determination, finding reliance on prior law prohibiting use of deductions was misguided where company pursued strategy of selling off real estate and other assets at time of triggering event.
Bank of America, N.A. v. Veluchamy (In re Veluchamy)
In a fraudulent transfer case involving S corp, court says valuation should reflect that buyers of S corps would experience a reduction in the value of the corporations' earnings because of the need to pay personal income taxes on those earnings.
Computing terminal value
In reviewing the Cost of Capital book, page 16, we noted Dr. Pratt's comments about the error in treating EBITDA as free cash flow. We also noted that Dr. Pratt utilizes net cash flow in his discussion of the Gordon Growth Model and the Two-Stage Model shown on pages 25 to 29.
Estate of Hoffman v. Commissioner
At issue is the fair market value of property interests held by decedent at the time of her death.
Appraisers Apply Myriad of Valuation Techniques to Various Estate Holdings
Marcia Hoffman's (decedent) estate held a 27.5% interest in Clubside Partnership, which was family owned.
1999 Guide to Business Valuations has "fair value" chapter, much more
The new 1999 Guide to Business Valuations contains more new material than any edition in several years.
On earning power & creative methodology
[T]he phrase 'earning power' must imply a fairly confident expectation of certain future results. It is not sufficient to know what the past earnings have averaged, or even that they disclose a defin ...
Drawing a clear distinction between income and market approaches and methodology
The point of this column is to advocate that income approach methods be distinguished clearly from market approach valuation methods. The valuation profession has (somewhat arbitrarily) classified ...
New studies quantifying size premiums offer strong cost of capital support
Roger Grabowski is a partner and national director of Price Waterhouse LLP Valuation Services Group. David King is a manager with Price Waterhouse LLP in their Chicago office. This repor ...