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Valuation News

Beware of valuation provisions
June 2, 2017
A recent Delaware Court of Chancery case demonstrates how courts give substantial weight to valuation provisions in owners' agreements, especially when the experts maintain their independence and follow the terms of these agreements.
 
Risk, return, and the Louisiana Purchase
April 15, 2016
In 1802, President Thomas Jefferson sent Robert Livingston to Paris to negotiate the purchase of the city of New Orleans and its surrounding area from France. Entering the negotiation, they were prepared to spend $10 million for this acquisition. On April 11, 1803, France's Treasury Minister François de Barbé-Marbois offered Livingston the entire Louisiana Territory for $15 million, a territory comprised of 827,000 square miles. The price in today's dollars was approximately $230 million or 41 cents per acre.
 
Valuation is key to succession planning
April 15, 2016
Most business owners spend a lifetime building their business. And when it comes to succession, they face the difficult decision of whether to sell, dissolve or transfer their business to family members. A business transfer involves several complicated issues, such as how to divvy up the family business into logical pieces, allocate value and tackle complex tax issues.
 
What's the value of my manufacturing business?
April 15, 2016
The value of your manufacturing company depends on a variety of factors, such as what products it manufactures, how it's expected to perform, where it's located and why you're appraising it. Let's take a closer look at the current merger and acquisition (M&A) market and how appraisers use three techniques to value manufacturers.
 
How does industry risk impact business valuation?
April 13, 2016
There's a trade-off between risk and return in business valuation. Investors expect to receive a higher return as the company exposes them to greater risk. Industry-specific risk is an important consideration when estimating an investor's expected return. Here's how business valuators measure industry risks and factor them into their analyses.
 
Multilevel valuation discounts: Handle with care
July 22, 2015
Estate planners often use family limited partnerships (FLPs) and family limited liability companies (FLLCs) to consolidate a family's wealth management, protect assets against creditors, and reduce gift and estate taxes. FLPs and FLLCs reduce taxes via valuation discounts for lack of control and marketability that are subtracted from the net asset value of the entity's holdings.
 
Minority shareholder disputes: Don't always count on stock-purchase agreements
July 22, 2015
Business owners enter into stock-purchase agreements to facilitate buyouts upon certain triggering events, such as a shareholder's death or divorce. But sometimes courts disregard these agreements, leaving shareholders vulnerable to paying (or receiving) an amount mandated by a judge who may not be familiar with the parties' preferences or financial conditions.
 
Beware the deal-killing valuation gap
Jan. 16, 2015
Perhaps you've heard the expression "time kills all deals." While that may be true, it appears that valuation gaps — differing deal pricing expectations between buyers and sellers — are the most common deal-killing culprit. The 2014 Pepperdine Private Capital Markets Report was recently issued and included information from debt capital providers, equity investors, investment bankers and business brokers regarding 2013 activity. Let's take a closer look at survey results from business brokers and investment bankers regarding sources of deal failure.
 
Getting your small-scale deal right
Feb. 10, 2014
Size does matter. Mergers between small-capitalized, privately held companies are different animals from larger-cap and public company combinations. Small deals can run more smoothly than large ones, but they also can get bogged down in issues that neither party could ever foresee.
 
Preventing and resolving post-acquisition disputes
Feb. 10, 2014
The year 2014 is expected to be a strong one for merger and acquisition (M&A) activity. Several factors are contributing to a deal-friendly environment such as inexpensive debt capital, strong stock prices and cash-heavy balance sheets that provide the currency needed to enter into deals. In addition, overall macro-economic strength continues to build. Against this backdrop, there is pent-up demand in those who wish to grow through acquisitions after years of standing on the sidelines during a slow economic recovery.
 
Identifying and protecting brand value in the digital age
March 25, 2013
To many businesses, their brand is a critical business asset. Of course, the value of this asset may not be identified on the balance sheet since many of the brand-building investments made by companies are expensed over time. However, when one company acquires another company, brand-related value may be recognized on the balance sheet of the acquiring company.