Z. Christopher Mercer, Travis W. Harms

Business Valuation (eBook, PDF)

An Integrated Theory

• Format: PDF

Produktbeschreibung

A guide that demystifies modern valuation theory and shows how to apply fundamental valuation concepts The revised and updated third edition of Business Valuation: An Integrated Theory explores the core concepts of the integrated theory of business valuation and adapts the theory to reflect how the market for private business actually works. In this third edition of their book, the authors--two experts on the topic of business valuation--help readers translate valuation theory into everyday valuation practice. This important updated book: * Includes an extended review of the core concepts of the integrated theory of business valuation and applies the theory on a total capital basis * Explains "typical" valuation discounts (marketability and minority interest) and premiums (control premiums) in the context of financial theory, institutional reality and the behavior of market participants * Explores evolving valuation perspectives in the context of the integrated theory * Written by two experts on valuation theory from Mercer Capital The third edition of Business Valuation is the only book available regarding an integrated theory of business valuation--offering an essential, unprecedented resource for business professionals.

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Produktdetails

• Verlag: Jossey-Bass
• Seitenzahl: 512
• Erscheinungstermin: 1. Oktober 2020
• Englisch
• ISBN-13: 9781119583110
• Artikelnr.: 60406340

Autorenporträt

Z. Christopher Mercer, ASA, CFA, (Memphis, TN) is the founder and chief executive officer of Mercer Capital. He has prepared, overseen, or contributed to hundreds of valuations for purposes related to tax, ESOPs, buy-sell agreements, and litigation, among others. He has extensive experience in litigation engagements including statutory fair value cases, divorce, and numerous other matters where valuation issues are in question. He is also an expert in buy-sell agreement disputes. Mercer is a prolific author on valuation-related topics and a frequent speaker on business valuation issues for national professional associations and other business and professional groups. TRAVIS W. HARMS, CFA, CPA/ABV, is the leader of Mercer Capital's Family Business Advisory Services Group. He focuses primarily on providing financial, strategic, and valuation consulting to multi-generational family businesses. Mr. Harms regularly speaks and writes on valuation and related topics for family business owners and their advisors.

Inhaltsangabe

Introduction xiii

What's New in the Third Edition? xiv

Who Should Read This Book? xvii

Part One Conceptual Overview of the Integrated Theory

Chapter 1 The World of Value 3

Introduction 3

Common Questions 3

The World of Value 4

The Organizing Principles 5

Summary 16

Chapter 2 The Integrated Theory (Equity Basis) 19

Introduction 19

Common Questions 20

The Fundamental Valuation Model 21

The Conceptual Levels of Value 23

Symbolic Notation for the Integrated Theory 27

The Marketable Minority Interest Level of Value 29

Introduction to the Control Levels of Value 35

Strategic Control Level of Value 51

Firmwide Levels versus the Shareholder Level of Value 58

The Nonmarketable Minority Level of Value 60

The Integrated Theory of Business Valuation on an Equity Basis 67

Summary 67

Chapter 3 The Integrated Theory (Enterprise Basis) 71

Introduction 71

Comparing the Levels of Value: Equity and Enterprise Bases 73

Final Comparisons of the Equity and Enterprise Bases 77

Summary 79

Part Two Valuing Enterprise Cash Flows

Chapter 4 Income Approach (Cash Flows) 83

Introduction 83

Reconciling Single-Period Capitalization and Discounted Cash Flow Methods 84

Defining Enterprise Cash Flows 90

Defining Equity Cash Flows 95

Reinvestment Rates and Interim Growth Rates 99

Terminal Growth Rates 104

Expected Cash Flows and the Integrated Theory 108

Marketable Minority Interest Level: Public Company Equivalent 115

Financial Control Level: Private Equity Cash Flows 124

Strategic Control Level: Strategic Acquirer Cash Flows 128

Assessing the Reasonableness of Projected

Enterprise Cash Flows 136

Conclusion 139

Chapter 5 Income Approach (Discount Rate) 141

Introduction 141

Return Basics: Realized versus Required Returns 142

Components of the Weighted Average Cost of Capital 148

Market Participants and the WACC 165

The Levels of Value and the WACC 169

Assessing Overall Reasonableness 175

Chapter 6 Market Approach (Guideline Public Companies) 177

Introduction 177

Relationship of the Income and Market Approaches 178

What Do Observed Public Company Valuation Multiples Mean? 180

Adjusting Valuation Multiples for Differences in Risk and Growth 199

Guideline Public Company Multiples and the Enterprise Levels of Value 214

Assessing Overall Reasonableness 219

Chapter 7 Market Approach (Guideline Transactions) 221

Introduction 221

Attributes of Guideline Transaction Data 222

Drawing Valuation Inferences from Guideline Transaction Data 225

Minority Interest Discounts Inferred from Observed Control Premiums 240

Guideline Transaction Multiples and the Levels of Value 242

Assessing Overall Reasonableness 244

Appendix 7-A: A Historical Perspective on the Control Premium and Minority Interest Discount 247

Part Three Valuing Shareholder Cash Flows

Chapter 8 Restricted Stock Discounts and Pre-IPO Studies 271

Introduction 271

An Overview of Restricted Stock Discounts 275

Review of the FMV/Stout Restricted Stock Database 306

Pre-IPO Discounts 317

Conclusion 325

Chapter 9 Introduction to the QMDM (Quantitative Marketability Discount Model) 327

Introdu