Business Valuation (1) Flashcards
Reasons for business valuation?
Determine the value of a private company
Aid in decisions on buying/selling shares in private companies
Place a value on companies entering the stock market
Determine the maximum price to pay when acquiring a listed company
What should a 20% share of a company have?
Less than 20% share of its total value
What should a 80% share be worth?
An 80% share should be worth more than 80% of the total value of the company
What should majority shareholders expect?
To be prepared to pay a premium for control
What information is needed for a business valuation?
Financial statements
Budgets and forecasts
Details about shareholders and shareholdings
Limitations of information needed for a business valuation?
Financial statements will be out of date and budgets/forecasts
What can the relevant range of prices in business valuationsd are between?
The minimum price the current owner is likely to accept AND The maximum price the bidder is likely to pay
What valuations are used for the valuation of shares?
Asset-based valuations
Income-based valuations
Cash flow-based valuations
