Business valuation discounts and premiums:
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| 1. Verfasser: | |
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| Format: | Buch |
| Sprache: | English |
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New York
Wiley
2001
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| Schlagworte: | |
| Online-Zugang: | Contributor biographical information Publisher description Table of contents Inhaltsverzeichnis |
| Beschreibung: | XXVIII, 404 S. |
| ISBN: | 0471394483 |
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Datensatz im Suchindex
| _version_ | 1804135133525049344 |
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| adam_text | Contents
List of Exhibits xvii
Foreword xxi
Preface xxiii
Acknowledgments xxvii
1. Overview of Business Valuation Discounts and Premiums
and the Bases to Which They Are Applied 1
Discounts and Premiums Reflect Relative Risk and Relative
Growth 2
Discounts and Premiums Are Big Money Issues 2
Entity Level versus Shareholder Level Discounts
and Premiums 3
How the Valuation Approaches Used Affect the Level of Value 11
Use of Public Company Data to Quantify Discounts
and Premiums 12
How the Standard of Value Affects Discounts and Premiums 13
Summary 15
2. Minority Discounts and Control Premiums 17
Relevant Definitions 18
Basic Minority/Control Value Relationship 19
Prerogatives of Control 20
Factors Affecting Degree of Control 21
How the Valuation Methodology Affects the Minority Discount
or Control Premium 29
Do Publicly Traded Minority Stock Prices Reflect Control Value? 33
How the Purpose of the Valuation Affects Minority Discounts
or Control Premiums 40
Summary 43
3. Empirical Data Regarding Minority Discounts and Control
Premiums 45
Premiums Paid in Acquisitions 45
Identifying Industries with Higher or Lower Control Premiums 56
Caveats Regarding Use of Control Premium Data 59
xi
X1j Contents
Percentage Discounts from Net Asset Value 61
Summary 62
4. Minority Discounts and Control Premiums in the Courts 64
Gift, Estate, and Income Tax Cases 66
Discounts for Lack of Control in Employee Stock Ownership
Plan Cases 68
Dissenting Shareholder Cases 69
Shareholder Oppression Cases 72
Marital Dissolution Cases 74
Bankruptcy Case 75
Summary 75
5. Discounts for Lack of Marketability for Minority Interests:
Concept and Evidence 78
Public Market Benchmark for Marketability 78
Empirical Evidence to Quantify Discounts for Lack of
Marketability 80
Restricted Stock Studies 80
Pre—Initial Public Offering Discount for Lack of Marketability
Studies 83
Regulatory and Court Recognition of Empirical Marketability
Discount Studies 87
Summary 88
6. Synopsis of Restricted Stock Studies 90
Securities and Exchange Commission Institutional Investor
Study 91
Gelman Study 98
Trout Study 98
Moroney Study 99
Maher Study 99
Standard Research Consultants Study 99
Silber Study 101
FMV Opinions Study 101
Management Planning Study 102
Johnson Study 105
Columbia Financial Advisors Study 108
Summary 109
7. John Emory Pre lnitial Public Offering Discount for Lack
of Marketability Studies—Complete Underlying Data 111
Study #1: January 1980 Oune 1981 112
Study #2: January 1985 Oune 1986 113
Contents xiii
Study #3: August 1987 January 1989 113
Study #4: February 1989 July 1990 113
Study #5: August 1990 January 1992 1 3
Study #6: February 1992 July 1993 124
Study #7: January 1994 June 1995 * 24
Study #8: November 1995 April 1997 124
Study #9: Dot Com Companies, May 1997 March 2000 125
Summary
8. Factors Affecting Discounts for Lack of Marketability
for Minority Interests
153
Size of Distributions
Prospects for Liquidity
Pool of Potential Buyers 16Q
Risk Factors .„„
Summary
9. Discounts for Lack of Marketability for Controlling
Interests
Discounts for Lack of Marketability for Controlling Interests: A ^ ^
Controversial Concept
Control, Marketable Is an Oxymoron
Bases from Which Controlling Interest Discounts for Lack
of Marketability May Be Deducted
Factors Affecting Controlling Interest Discounts for Lack ^ ^
of Marketability 172
Public Versus Private Company Acquisition Multiples
Court Treatment of Controlling Interest Discounts for Lack ^ ^
of Marketability 176
Summary
10. Quantitative Marketability Discount Model
178
Introduction _ 17q
What Is the Quantitative Marketability Discount Model? i »
Quantitative Marketability Discount Model: Base Case
Quantifying the Quantitative Marketability Discount Model ^ ^
Base Case 135
Marketable Minority Valuation Concepts 1 gg
Nonmarketable Minority Valuation Concepts 1 gQ
Expected Growth and Expected Returns 193
Summary
196
11. Marketability Discounts in the Courts
197
Gift and Estate Tax Cases
xjv Contents
Employee Stock Ownership Plan Case 199
Dissenting Shareholder Cases 200
Minority Oppression Cases 202
Marital Dissolution Cases 203
Summary 205
12. Voting versus Nonvoting Stock 208
Voting versus Nonvoting Stock Scenarios 209
Empirical Studies Show Little Differential for Small Minority
Interests 209
Transactions Involving Premiums for Control Blocks 211
Court Cases Involving Voting versus Nonvoting Stock 220
Summary 223
13. Key Person Discounts 224
Empirical Evidence Supports Key Person Discount 225
Factors to Consider in Analyzing the Key Person Discount 226
Quantifying the Magnitude of the Key Person Discount 227
Internal Revenue Service Recognizes Key Person Discount 228
U.S. Tax Court Cases Involving Key Person Discounts 229
Key Person Discounts in Marital Dissolutions 233
Summary 235
14. Discounts for Trapped ln Capital Gains Taxes 237
Rationale for Trapped ln Capital Gains Tax Discount 237
General Utilities Doctrine 238
Tax Court Recognizes Trapped ln Capital Gains 239
Internal Revenue Service Acquiesces to Trapped ln Capital
Gains Discount 241
Subsequent Tax Cases Regularly Recognize Trapped ln
Capital Gains Tax Discount 241
Trapped ln Capital Gains in Dissenting Stockholder Actions 243
Trapped ln Capital Gains in Bankruptcy Court 243
Trapped ln Capital Gains Taxes in Marital Dissolutions 244
Treatment of Capital Gains Tax Liability in S Corporations 247
Summary 248
15. Blockage Discounts 250
Blockage Is Distinct from Restricted Stock 251
Factors to Analyze in Quantifying Blockage Discount 252
Must Consider Ways of Selling Stock 254
Price Pressure and Market Exposure 254
Contents xv
Block Buyer Could Ameliorate Blockage Discount 254
Blockage Discounts Recognized in Estate and Gift Tax
Regulations 255
Blockage Discounts in U.S. Tax Court 255
Summary 258
16. Nonhomogeneous Assets ( Portfolio ) Discounts 260
Portfolio Discount Principle ^60
Empirical Evidence Supporting Portfolio Discounts 261
How to Value Companies with Disparate Portfolios 264
Quantifying the Portfolio Discount 265
Portfolio Discounts in the U.S. Tax Court 265
Summary
17. Discounts for Environmental, Litigation, and Other
Contingent Liabilities
Concept of the Contingent Liability Discount 269
Financial Accounting Standard #5 May Provide Guidance in
Quantifying Contingent Liabilities *
Treatment of Contingencies in the U.S. Tax Court ^
Summary
18. Discount Adjustments for Limited Partnership Interests
and Other Asset Management Entities
275
Introduction 275
Partnership Features 276
Other State Law and Regulatory Issues
Compliance with Federal Income Tax Regulations
Compliance with Federal Transfer Tax Regulations
Analysis of Ownership and Classes of Interests
Analysis of Underlying Adjusted Net Asset Value ^
Analysis of Income Capacity Value 279
Valuation of Noncontrolling Entity Interests
Discounts for Lack of Control and Marketability
Court Cases Regarding Limited Partnership Values ^
Summary
19. Premium and Discount Issues in Undivided 2g2
Interest Valuations
Description and Characteristics of Undivided Interests 293
Appraisal of Assets in Fee Simple Interest
Factors Affecting the Value of an Undivided Interest
xvj Contents
Valuation Adjustments for Undivided Interests 302
Court Decisions Related to Undivided Interest Discounts 309
Summary 314
20. Common Errors in Applying Discounts and Premiums 316
Using Synergistic Acquisition Premiums to Quantify Premiums
for Control 317
Assuming That the Discounted Cash Flow Valuation Method
Always Produces a Minority Value 317
Assuming That the Guideline Public Company Method Always
Produces a Minority Value 317
Valuing Underlying Assets Rather Than Stock or Partnership
Interests 318
Using Minority Interest Marketability Discount Data to Quantify
Marketability Discounts for Controlling Interests 318
Using Only Restricted Stock Studies (and Not Pre lnitial Public
Offering Studies) as Benchmark for Discounts for Lack
of Marketability 319
Inadequate Analysis of Relevant Factors 319
Indiscriminate Use of Average Discounts or Premiums 319
Applying (or Omitting) a Premium or Discount Inappropriately
for the Legal Context 320
Applying Discounts or Premiums to the Entire Capital Structure
Rather Than Only to Equity 320
Quantifying Discounts or Premiums Based on Past Court
Cases 320
Using an Asset Appraiser to Quantify Discounts or Premiums
for Stock or Partnership Interests 321
Summary 321
Appendixes
Appendix A Bibliography 323
Appendix B Data Resources 340
Appendix C Table of Cases 345
Appendix D How Much Can Marketability Affect Security
Values? 351
Appendix E Internal Revenue Service Revenue Ruling 77 287 360
Appendix F Securities and Exchange Commission Rules 144
and 144A 366
CPE Self Study Examination 383
Index 393
List of Exhibits
1.1 Estate of Weinberg v. Commissioner Experts and Court s Discounts from
Net Asset Value 3
1.2 Levels of Value in Terms of Characteristics of Ownership 6
1.3 Levels of Value in Private Companies Based on Owners Options for
Exit or Liquidity 7
1.4 Basis of Value Chart 8
1.5 American Society of Appraisers Business Valuation Standard VII,
Valuation Discounts and Premiums 9
2.1 Definitions Relating to Minority Discounts and Control Premiums 18
2.2A Summary of State Voting Requirements for Approval of Sale of Assets as
Business Combination 22
2.2B Summary of State Voting Requirements for Approval of Merger and Share
Exchange 25
2.3 Simple Two Attribute Model 37
2.4 Tradeoff Between Liquidity and Control 38
2.5 Schematic Relationship of Stock Market and M A Market 41
2.6 Articles and Conference Presentations Dealing with the Debate Over the
Question Do Publicly Traded Minority Stock Prices Reflect Control
Value? 42
2.7 Summary of How the Valuation Methodology Affects the Resulting
Value 44
3.1 Definitions of Terms 47
3.2 Announce and Closing Dates, Total Deal Value 50
3.3 Purchase Price/Share—Mergerstat Unaffected Price 51
3.4 Mergerstat Control Premiums 52
3.5 Control Premiums by Industry—Trailing 12 Months 53
3.6 Company Descriptions 54
3.7 Target Financials 57
3.8 Target Multiples 58
3.9 Industry Premiums (Percent Premium Offered) 59
5.1 Summary of Restricted Stock Transaction Studies 81
5.2 Summary of Discounts for Private Transaction P/E Multiples Compared to
Public Offering P/E Multiples Adjusted for Changes in Industry P/E
Multiples 85
5.3 Value of Marketability as Illustrated in Initial Public Offerings of
Common Stock 86
xvii
xvjjj List of Exhibits
5.4 Valuation Advisors 1999 Pre IPO Discount Study 87
6.1 Discounts on Purchase Price of Restricted Common Stock Classified by
Trading Market 92
6.2 Discounts on Purchase Price of Restricted Common Stock Classified by
Institution 93
6.3 Discounts on Purchase Price of Restricted Common Stock Classified by
Size of Transaction and Sales of Issuer 94
6.4 Average Discounts on Purchase Price of Restricted Common Stock
Classified by Sales of Issuer 95
6.5 Discounts on Purchase Price of Restricted Common Stock Classified by
Earnings of Issuer 96
6.6 Average Discounts on Purchase Price of Restricted Common Stock
Classified by Earnings of Issuer Year by Year 97
6.7 Distribution of Discounts in Gelman Study 98
6.8 Original Purchase Discounts, Moroney Study 100
6.9 Relationship Between Earnings and Discount, Management Planning
Study 104
6.10 Relationship Between Earnings Stability and Discount, Management
Planning Study 106
6.11 Johnson Study 108
7.1 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, January 1,
1980 June30, 1981 114
7.2 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, January 1,
1985 June 30, 1986 116
7.3 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, August
1987 January 1989 118
7.4 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, February
1989 July 1990 120
7.5 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, August
1990 January 1992 122
7.6 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, February
1992 July 1993 126
7.7 Eair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, January
1994 June 1995 130
7.8 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, November
1995 April 1997 133
List of Exhibits xix
7.9 Discounts for Lack of Marketability Arising From Sales Transactions,
November 1995 April 1997 140
7.10A Pre IPO Dot Com Discount Study, May 1997 March 2000 142
7.10B Discounts by SIC Code, Pre IPO Dot Com Discount Study, May 1997
March 2000 146
7.10C Supplementary Schedule, Pre IPO Dot Com Discount Study 148
7.10D Footnote Summary, Pre IPO Dot Com Discount Study 151
8.1 The Partnership Spectrum Results 155
8.2 Standard Research Consultants Study 161
8.3 Management Planning Study—Stability of Earnings 161
8.4 Management Planning Study—Level of Earnings 162
8.5 Johnson Study—Net Income 162
8.6 Johnson Study—Sales 163
9.1 Levels of Value in Terms of Characteristics of Ownership 168
9.2 Median P/E Offered Public versus Private, 1991 2000 173
10.1 Levels of Value Chart 179
10.2 Summary of QMDM Base Case 182
10.3 Graphic Representation of Investor Assumptions 183
10.4 Calculated Marketability Discount 184
10.5 QMDM Base Case Quantified 185
10.6 Holding Period under Rule 144 191
10.7 Estimated Implied Returns 192
10.8 Summary of Results of Applying the QMDM in 10 Example
Appraisals 193
12.1 Houlihan Lokey Howard Zukin Study of Premiums Paid for
Voting Rights 212
12.2A Transactions in Which Premiums Were Paid for High Vote Shares 216
12.2B Analysis of Premiums Paid for High Vote Shares 218
15.1 Definitions of Blockage and Blockage Discount 251
15.2 Summary of Selected Tax Cases Involving Blockage Discounts 257
16.1 Portfolio Discounts Implied by AT T and ITT Breakups 262
16.2 Companies Classified as Conglomerates by Yahoo! 263
16.3 Estimated Breakup Values of Existing Conglomerates 264
18.1 Case Settlements with the IRS 282
18.2 Discounts Indicated in The Partnership Spectrum Study 2000 288
19.1 Definitions Related to Undivided Ownership Interests 294
19.2 The Partnership Spectrum Annual Survey Results, 1993 2000 305
19.3 Tax Court s Calculations in Estate ofBusch v. Commissioner 311
19.4 Tax Court s Calculations in Estate of Williams v. Commissioner 312
19.5 Tax Court s Calculations in Estate of Barge v. Commissioner 313
|
| adam_txt |
Contents
List of Exhibits xvii
Foreword xxi
Preface xxiii
Acknowledgments xxvii
1. Overview of Business Valuation Discounts and Premiums
and the Bases to Which They Are Applied 1
Discounts and Premiums Reflect Relative Risk and Relative
Growth 2
Discounts and Premiums Are Big Money Issues 2
"Entity Level" versus "Shareholder Level" Discounts
and Premiums 3
How the Valuation Approaches Used Affect the Level of Value 11
Use of Public Company Data to Quantify Discounts
and Premiums 12
How the Standard of Value Affects Discounts and Premiums 13
Summary 15
2. Minority Discounts and Control Premiums 17
Relevant Definitions 18
Basic Minority/Control Value Relationship 19
Prerogatives of Control 20
Factors Affecting Degree of Control 21
How the Valuation Methodology Affects the Minority Discount
or Control Premium 29
Do Publicly Traded Minority Stock Prices Reflect Control Value? 33
How the Purpose of the Valuation Affects Minority Discounts
or Control Premiums 40
Summary 43
3. Empirical Data Regarding Minority Discounts and Control
Premiums 45
Premiums Paid in Acquisitions 45
Identifying Industries with Higher or Lower Control Premiums 56
Caveats Regarding Use of Control Premium Data 59
xi
X1j Contents
Percentage Discounts from Net Asset Value 61
Summary 62
4. Minority Discounts and Control Premiums in the Courts 64
Gift, Estate, and Income Tax Cases 66
Discounts for Lack of Control in Employee Stock Ownership
Plan Cases 68
Dissenting Shareholder Cases 69
Shareholder Oppression Cases 72
Marital Dissolution Cases 74
Bankruptcy Case 75
Summary 75
5. Discounts for Lack of Marketability for Minority Interests:
Concept and Evidence 78
Public Market Benchmark for Marketability 78
Empirical Evidence to Quantify Discounts for Lack of
Marketability 80
Restricted Stock Studies 80
Pre—Initial Public Offering Discount for Lack of Marketability
Studies 83
Regulatory and Court Recognition of Empirical Marketability
Discount Studies 87
Summary 88
6. Synopsis of Restricted Stock Studies 90
Securities and Exchange Commission Institutional Investor
Study 91
Gelman Study 98
Trout Study 98
Moroney Study 99
Maher Study 99
Standard Research Consultants Study 99
Silber Study 101
FMV Opinions Study 101
Management Planning Study 102
Johnson Study 105
Columbia Financial Advisors Study 108
Summary 109
7. John Emory Pre lnitial Public Offering Discount for Lack
of Marketability Studies—Complete Underlying Data 111
Study #1: January 1980 Oune 1981 112
Study #2: January 1985 Oune 1986 113
Contents xiii
Study #3: August 1987 January 1989 113
Study #4: February 1989 July 1990 113
Study #5: August 1990 January 1992 1'3
Study #6: February 1992 July 1993 124
Study #7: January 1994 June 1995 * 24
Study #8: November 1995 April 1997 124
Study #9: Dot Com Companies, May 1997 March 2000 125
Summary
8. Factors Affecting Discounts for Lack of Marketability
for Minority Interests
153
Size of Distributions
Prospects for Liquidity
Pool of Potential Buyers 16Q
Risk Factors .„„
Summary
9. Discounts for Lack of Marketability for Controlling
Interests
Discounts for Lack of Marketability for Controlling Interests: A ^ ^
Controversial Concept
"Control, Marketable" Is an Oxymoron
Bases from Which Controlling Interest Discounts for Lack
of Marketability May Be Deducted
Factors Affecting Controlling Interest Discounts for Lack ^ ^
of Marketability 172
Public Versus Private Company Acquisition Multiples
Court Treatment of Controlling Interest Discounts for Lack ^ ^
of Marketability 176
Summary
10. Quantitative Marketability Discount Model
178
Introduction _ 17q
What Is the Quantitative Marketability Discount Model? i'»
Quantitative Marketability Discount Model: Base Case
Quantifying the Quantitative Marketability Discount Model ^ ^
Base Case 135
Marketable Minority Valuation Concepts 1 gg
Nonmarketable Minority Valuation Concepts 1 gQ
Expected Growth and Expected Returns 193
Summary
196
11. Marketability Discounts in the Courts
197
Gift and Estate Tax Cases
xjv Contents
Employee Stock Ownership Plan Case 199
Dissenting Shareholder Cases 200
Minority Oppression Cases 202
Marital Dissolution Cases 203
Summary 205
12. Voting versus Nonvoting Stock 208
Voting versus Nonvoting Stock Scenarios 209
Empirical Studies Show Little Differential for Small Minority
Interests 209
Transactions Involving Premiums for Control Blocks 211
Court Cases Involving Voting versus Nonvoting Stock 220
Summary 223
13. Key Person Discounts 224
Empirical Evidence Supports Key Person Discount 225
Factors to Consider in Analyzing the Key Person Discount 226
Quantifying the Magnitude of the Key Person Discount 227
Internal Revenue Service Recognizes Key Person Discount 228
U.S. Tax Court Cases Involving Key Person Discounts 229
Key Person Discounts in Marital Dissolutions 233
Summary 235
14. Discounts for Trapped ln Capital Gains Taxes 237
Rationale for Trapped ln Capital Gains Tax Discount 237
"General Utilities Doctrine" 238
Tax Court Recognizes Trapped ln Capital Gains 239
Internal Revenue Service Acquiesces to Trapped ln Capital
Gains Discount 241
Subsequent Tax Cases Regularly Recognize Trapped ln
Capital Gains Tax Discount 241
Trapped ln Capital Gains in Dissenting Stockholder Actions 243
Trapped ln Capital Gains in Bankruptcy Court 243
Trapped ln Capital Gains Taxes in Marital Dissolutions 244
Treatment of Capital Gains Tax Liability in S Corporations 247
Summary 248
15. Blockage Discounts 250
Blockage Is Distinct from Restricted Stock 251
Factors to Analyze in Quantifying Blockage Discount 252
Must Consider Ways of Selling Stock 254
"Price Pressure" and "Market Exposure" 254
Contents xv
Block Buyer Could Ameliorate Blockage Discount 254
Blockage Discounts Recognized in Estate and Gift Tax
Regulations 255
Blockage Discounts in U.S. Tax Court 255
Summary 258
16. Nonhomogeneous Assets ("Portfolio") Discounts 260
Portfolio Discount Principle ^60
Empirical Evidence Supporting Portfolio Discounts 261
How to Value Companies with Disparate Portfolios 264
Quantifying the Portfolio Discount 265
Portfolio Discounts in the U.S. Tax Court 265
Summary
17. Discounts for Environmental, Litigation, and Other
Contingent Liabilities
Concept of the Contingent Liability Discount 269
Financial Accounting Standard #5 May Provide Guidance in
Quantifying Contingent Liabilities *'
Treatment of Contingencies in the U.S. Tax Court ^
Summary
18. Discount Adjustments for Limited Partnership Interests
and Other Asset Management Entities
275
Introduction 275
Partnership Features 276
Other State Law and Regulatory Issues
Compliance with Federal Income Tax Regulations
Compliance with Federal Transfer Tax Regulations "
Analysis of Ownership and Classes of Interests
Analysis of Underlying Adjusted Net Asset Value ^
Analysis of Income Capacity Value 279
Valuation of Noncontrolling Entity Interests
Discounts for Lack of Control and Marketability
Court Cases Regarding Limited Partnership Values ^
Summary
19. Premium and Discount Issues in Undivided 2g2
Interest Valuations
Description and Characteristics of Undivided Interests 293
Appraisal of Assets in Fee Simple Interest
Factors Affecting the Value of an Undivided Interest
xvj Contents
Valuation Adjustments for Undivided Interests 302
Court Decisions Related to Undivided Interest Discounts 309
Summary 314
20. Common Errors in Applying Discounts and Premiums 316
Using Synergistic Acquisition Premiums to Quantify Premiums
for Control 317
Assuming That the Discounted Cash Flow Valuation Method
Always Produces a Minority Value 317
Assuming That the Guideline Public Company Method Always
Produces a Minority Value 317
Valuing Underlying Assets Rather Than Stock or Partnership
Interests 318
Using Minority Interest Marketability Discount Data to Quantify
Marketability Discounts for Controlling Interests 318
Using Only Restricted Stock Studies (and Not Pre lnitial Public
Offering Studies) as Benchmark for Discounts for Lack
of Marketability 319
Inadequate Analysis of Relevant Factors 319
Indiscriminate Use of Average Discounts or Premiums 319
Applying (or Omitting) a Premium or Discount Inappropriately
for the Legal Context 320
Applying Discounts or Premiums to the Entire Capital Structure
Rather Than Only to Equity 320
Quantifying Discounts or Premiums Based on Past Court
Cases 320
Using an Asset Appraiser to Quantify Discounts or Premiums
for Stock or Partnership Interests 321
Summary 321
Appendixes
Appendix A Bibliography 323
Appendix B Data Resources 340
Appendix C Table of Cases 345
Appendix D How Much Can Marketability Affect Security
Values? 351
Appendix E Internal Revenue Service Revenue Ruling 77 287 360
Appendix F Securities and Exchange Commission Rules 144
and 144A 366
CPE Self Study Examination 383
Index 393
List of Exhibits
1.1 Estate of Weinberg v. Commissioner Experts' and Court's Discounts from
Net Asset Value 3
1.2 "Levels of Value" in Terms of Characteristics of Ownership 6
1.3 "Levels of Value" in Private Companies Based on Owners' Options for
Exit or Liquidity 7
1.4 Basis of Value Chart 8
1.5 American Society of Appraisers Business Valuation Standard VII,
Valuation Discounts and Premiums 9
2.1 Definitions Relating to Minority Discounts and Control Premiums 18
2.2A Summary of State Voting Requirements for Approval of Sale of Assets as
Business Combination 22
2.2B Summary of State Voting Requirements for Approval of Merger and Share
Exchange 25
2.3 Simple Two Attribute Model 37
2.4 Tradeoff Between Liquidity and Control 38
2.5 Schematic Relationship of Stock Market and M A Market 41
2.6 Articles and Conference Presentations Dealing with the Debate Over the
Question "Do Publicly Traded Minority Stock Prices Reflect Control
Value?" 42
2.7 Summary of How the Valuation Methodology Affects the Resulting
Value 44
3.1 Definitions of Terms 47
3.2 Announce and Closing Dates, Total Deal Value 50
3.3 Purchase Price/Share—Mergerstat Unaffected Price 51
3.4 Mergerstat Control Premiums 52
3.5 Control Premiums by Industry—Trailing 12 Months 53
3.6 Company Descriptions 54
3.7 Target Financials 57
3.8 Target Multiples 58
3.9 Industry Premiums (Percent Premium Offered) 59
5.1 Summary of Restricted Stock Transaction Studies 81
5.2 Summary of Discounts for Private Transaction P/E Multiples Compared to
Public Offering P/E Multiples Adjusted for Changes in Industry P/E
Multiples 85
5.3 Value of Marketability as Illustrated in Initial Public Offerings of
Common Stock 86
xvii
xvjjj List of Exhibits
5.4 Valuation Advisors 1999 Pre IPO Discount Study 87
6.1 Discounts on Purchase Price of Restricted Common Stock Classified by
Trading Market 92
6.2 Discounts on Purchase Price of Restricted Common Stock Classified by
Institution 93
6.3 Discounts on Purchase Price of Restricted Common Stock Classified by
Size of Transaction and Sales of Issuer 94
6.4 Average Discounts on Purchase Price of Restricted Common Stock
Classified by Sales of Issuer 95
6.5 Discounts on Purchase Price of Restricted Common Stock Classified by
Earnings of Issuer 96
6.6 Average Discounts on Purchase Price of Restricted Common Stock
Classified by Earnings of Issuer Year by Year 97
6.7 Distribution of Discounts in Gelman Study 98
6.8 Original Purchase Discounts, Moroney Study 100
6.9 Relationship Between Earnings and Discount, Management Planning
Study 104
6.10 Relationship Between Earnings Stability and Discount, Management
Planning Study 106
6.11 Johnson Study 108
7.1 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, January 1,
1980 June30, 1981 114
7.2 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, January 1,
1985 June 30, 1986 116
7.3 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, August
1987 January 1989 118
7.4 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, February
1989 July 1990 120
7.5 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, August
1990 January 1992 122
7.6 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, February
1992 July 1993 126
7.7 Eair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, January
1994 June 1995 130
7.8 Fair Market Value Transactions Which Occurred Within Five Months Prior
to an Initial Public Offering as Disclosed in the Prospectus, November
1995 April 1997 133
List of Exhibits xix
7.9 Discounts for Lack of Marketability Arising From Sales Transactions,
November 1995 April 1997 140
7.10A Pre IPO Dot Com Discount Study, May 1997 March 2000 142
7.10B Discounts by SIC Code, Pre IPO Dot Com Discount Study, May 1997
March 2000 146
7.10C Supplementary Schedule, Pre IPO Dot Com Discount Study 148
7.10D Footnote Summary, Pre IPO Dot Com Discount Study 151
8.1 The Partnership Spectrum Results 155
8.2 Standard Research Consultants Study 161
8.3 Management Planning Study—Stability of Earnings 161
8.4 Management Planning Study—Level of Earnings 162
8.5 Johnson Study—Net Income 162
8.6 Johnson Study—Sales 163
9.1 Levels of Value in Terms of Characteristics of Ownership 168
9.2 Median P/E Offered Public versus Private, 1991 2000 173
10.1 Levels of Value Chart 179
10.2 Summary of QMDM Base Case 182
10.3 Graphic Representation of Investor Assumptions 183
10.4 Calculated Marketability Discount 184
10.5 QMDM Base Case Quantified 185
10.6 Holding Period under Rule 144 191
10.7 Estimated Implied Returns 192
10.8 Summary of Results of Applying the QMDM in 10 Example
Appraisals 193
12.1 Houlihan Lokey Howard Zukin Study of Premiums Paid for
Voting Rights 212
12.2A Transactions in Which Premiums Were Paid for High Vote Shares 216
12.2B Analysis of Premiums Paid for High Vote Shares 218
15.1 Definitions of Blockage and Blockage Discount 251
15.2 Summary of Selected Tax Cases Involving Blockage Discounts 257
16.1 Portfolio Discounts Implied by AT T and ITT Breakups 262
16.2 Companies Classified as Conglomerates by Yahoo! 263
16.3 Estimated Breakup Values of Existing Conglomerates 264
18.1 Case Settlements with the IRS 282
18.2 Discounts Indicated in The Partnership Spectrum Study 2000 288
19.1 Definitions Related to Undivided Ownership Interests 294
19.2 The Partnership Spectrum Annual Survey Results, 1993 2000 305
19.3 Tax Court's Calculations in Estate ofBusch v. Commissioner 311
19.4 Tax Court's Calculations in Estate of Williams v. Commissioner 312
19.5 Tax Court's Calculations in Estate of Barge v. Commissioner 313 |
| any_adam_object | 1 |
| any_adam_object_boolean | 1 |
| author | Pratt, Shannon P. 1933-2021 |
| author_GND | (DE-588)142483109 |
| author_facet | Pratt, Shannon P. 1933-2021 |
| author_role | aut |
| author_sort | Pratt, Shannon P. 1933-2021 |
| author_variant | s p p sp spp |
| building | Verbundindex |
| bvnumber | BV021323621 |
| callnumber-first | H - Social Science |
| callnumber-label | HG4028 |
| callnumber-raw | HG4028.V3 |
| callnumber-search | HG4028.V3 |
| callnumber-sort | HG 44028 V3 |
| callnumber-subject | HG - Finance |
| classification_rvk | QP 770 QP 880 |
| ctrlnum | (OCoLC)46952219 (DE-599)BVBBV021323621 |
| dewey-full | 658.15 |
| dewey-hundreds | 600 - Technology (Applied sciences) |
| dewey-ones | 658 - General management |
| dewey-raw | 658.15 |
| dewey-search | 658.15 |
| dewey-sort | 3658.15 |
| dewey-tens | 650 - Management and auxiliary services |
| discipline | Wirtschaftswissenschaften |
| discipline_str_mv | Wirtschaftswissenschaften |
| format | Book |
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| id | DE-604.BV021323621 |
| illustrated | Not Illustrated |
| index_date | 2024-07-02T13:59:38Z |
| indexdate | 2024-07-09T20:35:40Z |
| institution | BVB |
| isbn | 0471394483 |
| language | English |
| lccn | 2001026448 |
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| physical | XXVIII, 404 S. |
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| spelling | Pratt, Shannon P. 1933-2021 Verfasser (DE-588)142483109 aut Business valuation discounts and premiums Shannon P. Pratt New York Wiley 2001 XXVIII, 404 S. txt rdacontent n rdamedia nc rdacarrier Entreprises - Évaluation aBusiness enterprises xValuation Preiskalkulation (DE-588)4175621-6 gnd rswk-swf Unternehmensbewertung (DE-588)4078594-4 gnd rswk-swf Unternehmensbewertung (DE-588)4078594-4 s Preiskalkulation (DE-588)4175621-6 s b DE-604 http://www.loc.gov/catdir/bios/wiley042/2001026448.html Contributor biographical information http://www.loc.gov/catdir/description/wiley035/2001026448.html Publisher description http://www.loc.gov/catdir/toc/wiley021/2001026448.html Table of contents HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=014643984&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Pratt, Shannon P. 1933-2021 Business valuation discounts and premiums Entreprises - Évaluation aBusiness enterprises xValuation Preiskalkulation (DE-588)4175621-6 gnd Unternehmensbewertung (DE-588)4078594-4 gnd |
| subject_GND | (DE-588)4175621-6 (DE-588)4078594-4 |
| title | Business valuation discounts and premiums |
| title_auth | Business valuation discounts and premiums |
| title_exact_search | Business valuation discounts and premiums |
| title_exact_search_txtP | Business valuation discounts and premiums |
| title_full | Business valuation discounts and premiums Shannon P. Pratt |
| title_fullStr | Business valuation discounts and premiums Shannon P. Pratt |
| title_full_unstemmed | Business valuation discounts and premiums Shannon P. Pratt |
| title_short | Business valuation discounts and premiums |
| title_sort | business valuation discounts and premiums |
| topic | Entreprises - Évaluation aBusiness enterprises xValuation Preiskalkulation (DE-588)4175621-6 gnd Unternehmensbewertung (DE-588)4078594-4 gnd |
| topic_facet | Entreprises - Évaluation aBusiness enterprises xValuation Preiskalkulation Unternehmensbewertung |
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