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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.

Two Methods to Adjust Observed Control Premia for Valuation Purposes

The greater a target company’s leverage, the less cash, or acquirer’s shares, a buyer needs to control the target enterprise. Based on this idea, the Appraisal Foundation Working Group’s Discussion Draft, The Measurement and Application of Market Participant Acquisition Premiums, recommends as a best practice that appraisers adjust takeover premia for leverage. Previous recent research found empirical results consistent with this, namely, that higher equity takeover premia are related to higher pre-deal leverage levels, controlling ...

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