Details

Business Valuation


Business Valuation

An Integrated Theory
Wiley Series in Finance 3. Aufl.

von: Z. Christopher Mercer, Travis W. Harms

77,99 €

Verlag: Wiley
Format: EPUB
Veröffentl.: 05.11.2020
ISBN/EAN: 9781119583103
Sprache: englisch
Anzahl Seiten: 512

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Beschreibungen

<p><b>A guide that demystifies modern valuation theory and shows how to apply fundamental valuation concepts</b></p> <p>The revised and updated third edition of <i>Business Valuation: An Integrated Theory</i> 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.</p> <p>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:</p> <ul> <li>Includes an extended review of the core concepts of the integrated theory of business valuation and applies the theory on a total capital basis</li> <li>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</li> <li>Explores evolving valuation perspectives in the context of the integrated theory</li> <li>Written by two experts on valuation theory from Mercer Capital</li> </ul> <p>The third edition of <i>Business Valuation</i> is the only book available regarding an integrated theory of business valuation—offering an essential, unprecedented resource for business professionals.</p>
<p>Introduction xiii</p> <p>What’s New in the Third Edition? xiv</p> <p>Who Should Read This Book? xvii</p> <p><b>Part One Conceptual Overview of the Integrated Theory</b></p> <p><b>Chapter 1 The World of Value 3</b></p> <p>Introduction 3</p> <p>Common Questions 3</p> <p>The World of Value 4</p> <p>The Organizing Principles 5</p> <p>Summary 16</p> <p><b>Chapter 2 The Integrated Theory (Equity Basis) 19</b></p> <p>Introduction 19</p> <p>Common Questions 20</p> <p>The Fundamental Valuation Model 21</p> <p>The Conceptual Levels of Value 23</p> <p>Symbolic Notation for the Integrated Theory 27</p> <p>The Marketable Minority Interest Level of Value 29</p> <p>Introduction to the Control Levels of Value 35</p> <p>Strategic Control Level of Value 51</p> <p>Firmwide Levels versus the Shareholder Level of Value 58</p> <p>The Nonmarketable Minority Level of Value 60</p> <p>The Integrated Theory of Business Valuation on an Equity Basis 67</p> <p>Summary 67</p> <p><b>Chapter 3 The Integrated Theory (Enterprise Basis) 71</b></p> <p>Introduction 71</p> <p>Comparing the Levels of Value: Equity and Enterprise Bases 73</p> <p>Final Comparisons of the Equity and Enterprise Bases 77</p> <p>Summary 79</p> <p><b>Part Two Valuing Enterprise Cash Flows</b></p> <p><b>Chapter 4 Income Approach (Cash Flows) 83</b></p> <p>Introduction 83</p> <p>Reconciling Single-Period Capitalization and Discounted Cash Flow Methods 84</p> <p>Defining Enterprise Cash Flows 90</p> <p>Defining Equity Cash Flows 95</p> <p>Reinvestment Rates and Interim Growth Rates 99</p> <p>Terminal Growth Rates 104</p> <p>Expected Cash Flows and the Integrated Theory 108</p> <p>Marketable Minority Interest Level: Public Company Equivalent 115</p> <p>Financial Control Level: Private Equity Cash Flows 124</p> <p>Strategic Control Level: Strategic Acquirer Cash Flows 128</p> <p>Assessing the Reasonableness of Projected</p> <p>Enterprise Cash Flows 136</p> <p>Conclusion 139</p> <p><b>Chapter 5 Income Approach (Discount Rate) 141</b></p> <p>Introduction 141</p> <p>Return Basics: Realized versus Required Returns 142</p> <p>Components of the Weighted Average Cost of Capital 148</p> <p>Market Participants and the WACC 165</p> <p>The Levels of Value and the WACC 169</p> <p>Assessing Overall Reasonableness 175</p> <p><b>Chapter 6 Market Approach (Guideline Public Companies) 177</b></p> <p>Introduction 177</p> <p>Relationship of the Income and Market Approaches 178</p> <p>What Do Observed Public Company Valuation Multiples Mean? 180</p> <p>Adjusting Valuation Multiples for Differences in Risk and Growth 199</p> <p>Guideline Public Company Multiples and the Enterprise Levels of Value 214</p> <p>Assessing Overall Reasonableness 219</p> <p><b>Chapter 7 Market Approach (Guideline Transactions) 221</b></p> <p>Introduction 221</p> <p>Attributes of Guideline Transaction Data 222</p> <p>Drawing Valuation Inferences from Guideline Transaction Data 225</p> <p>Minority Interest Discounts Inferred from Observed Control Premiums 240</p> <p>Guideline Transaction Multiples and the Levels of Value 242</p> <p>Assessing Overall Reasonableness 244</p> <p>Appendix 7-A: A Historical Perspective on the Control Premium and Minority Interest Discount 247</p> <p><b>Part Three Valuing Shareholder Cash Flows</b></p> <p>Chapter 8 Restricted Stock Discounts and Pre-IPO Studies 271</p> <p>Introduction 271</p> <p>An Overview of Restricted Stock Discounts 275</p> <p>Review of the FMV/Stout Restricted Stock Database 306</p> <p>Pre-IPO Discounts 317</p> <p>Conclusion 325</p> <p><b>Chapter 9 Introduction to the QMDM (Quantitative Marketability Discount Model) 327</b></p> <p>Introduction 327</p> <p>Potential Valuation Approaches at the Shareholder Level 328</p> <p>A Shareholder Level Discounted Cash Flow Model in Outline 331</p> <p>Economic Factors Giving Rise to the Marketability Discount 338</p> <p>Conclusion 346</p> <p>Appendix 9-A: Liquidity and Marketability 349</p> <p><b>Chapter 10 The QMDM Assumptions in Detail 359</b></p> <p>Introduction 359</p> <p>Assumption 1: Expected Holding Period for the Investment (<i>HP</i>) 360</p> <p>Assumption 2A: Expected Dividend Yield (D %) 368</p> <p>Assumption 2B: Expected Growth of Dividends (<i>GD</i>) 377</p> <p>Assumption 2C: Timing of Dividend Receipt 378</p> <p>Assumption 3A: The Expected Growth Rate in Value (<i>GV</i>) 379</p> <p>Assumption 3B: Adjustments to the Terminal Value 385</p> <p>Assumption 4: Required Holding Period Return (<i>Rhp</i>) 385</p> <p>Conclusion 399</p> <p><b>Chapter 11 Applying the QMDM 401</b></p> <p>Introduction 401</p> <p>Comprehensive Example of the QMDM in Use 401</p> <p>Condensed QMDM Examples 414</p> <p>The Uniform Standards of Professional Appraisal Practice and the QMDM 427</p> <p><b>Chapter 12 Applying the Integrated Theory to Tax Pass-Through Entities 435</b></p> <p>Introduction 435</p> <p>The Nature of the S Corporation Benefit 437</p> <p>The Firmwide Level Value of S Corporations 440</p> <p>Other Observations Regarding Relative Value at the Firmwide Levels 443</p> <p>The Shareholder Level Value of S Corporations 446</p> <p>S Corporations and the Tax Cuts and Jobs Act of 2017 458</p> <p>Conclusion 467</p> <p>About the Authors 469</p> <p>Index 477</p>
<p><b>Z. Christopher Mercer, ASA, CFA, (Memphis, TN)</b> 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.</p> <p><b>TRAVIS W. HARMS, CFA, CPA/ABV,</b> 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.</p>
<p><b> Praise for Business Valuation</b> <p>"Mercer and Harms' <i>Business Valuation: An Integrated Theory, Third Edition</i> provides valuation professionals, attorneys, other users of valuations, and students of valuation a resource for better understanding how the pieces of the valuation puzzle fit together. This book is written in an easy to follow style and is worthy of being added to your valuation library."<br> <b> —Roger J. Grabowski,</b> <b>FASA,</b> Managing Director, Duff & Phelps <p>"It has been 13 years since the second edition of this book came out. It was certainly worth the wait. All the core chapters have been updated with easy-to-understand explanations of valuation concepts. Mercer and Harms have also added new chapters on the Income Approach (Cash Flows), the Income Approach (Discount Rate), the Market Approach (Guideline Public Companies), the Market Approach (Guideline Transactions), and Restricted Stock Discounts and Pre-IPO studies. This well-written book presents a thoughtful approach to business valuation. The bottom line is that this is a valuable resource that tackles controversial topics head on."<br> <b> —James R. Hitchner,</b> <b>CPA/ABV/CFF, ASA,</b> Managing Director, Financial Valuation Advisors <p><b>Master the approaches and methods of business valuation with this comprehensive resource from two industry leaders</b> <p>In this book, distinguished authors and valuation analysts Z. Christopher Mercer and Travis W. Harms of Mercer Capital dive deeply into the intricacies of business valuation, providing readers with an Integrated Theory that acts as a practical and powerful tool to value businesses and business ownership interests. Using expected cash flow, growth, and risk as the foundations of the Integrated Theory, the authors discuss the major, organizing principles of business valuation, as well as the various methods used to value businesses and business ownership interests. <p>They provide a detailed discussion of the Quantitative Marketability Discount Model, which applies the Integrated Theory to the valuation of illiquid minority ownership interests in private companies. <p>The book is not just theoretical, but practical, eschewing unnecessary mathematical detail in favor of concrete examples and strategic advice designed to help valuation analysts put the Integrated Theory into practice. It contains actionable advice on how to deal with commonly encountered valuation dilemmas, like valuing tax pass-through entities and ownership interests in them.

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