Private Equity

3 Approaches to Valuing a Businesss

Valuing a private business is a complex endeavor. But, when all is said and done, valuation analyses boil down to three general approaches. 1. Market Approach Under this approach, valuators derive pricing multiples from public or private comparable transactions. These pricing multiples are then applied to the subject company to derive its value. For example, […]

Read the full article

Taking a Red Pen to Make Financial Adjustments for Valuation Purposes

Financial statements are an important source of data for valuing a business. But they tell only part of the story. An accurate business valuation hinges on a comprehensive understanding of the subject company’s relative performance and its future earnings power. To help clarify matters, experts often make various adjustments to the financials. Here are some […]

Read the full article

Do Valuation Discounts Apply to Compulsory Shareholder Buyouts?

Valuation discounts for lack of control and marketability are major points of contention when companies or controlling shareholders are required to buy out shareholders who own minority interests. What’s appropriate depends on the facts of the case — and there’s an important distinction between statutory and contractual buyouts. Statutory Buyouts In many jurisdictions, minority shareholders […]

Read the full article

Rx for Valuing a Distressed Business

Over the last two years, market conditions — from cost increases and forced shutdowns to shortages of labor and supplies — have taken their toll on many businesses. While owners of distressed businesses may hope to turn things around, some will unfortunately shutter. Valuation is a prophecy of the future, not the past. So valuing […]

Read the full article

Don’t Discount the Key Person Discount

In the fourth quarter of 2021, CEO resignations were up 16% over the prior year, according to executive outplacement firm Challenger, Gray & Christmas. Recent and announced high profile departures include Twitter’s Jack Dorsey, Amazon’s Jeff Bezos and American Airlines’ Doug Parker. This trend is expected to continue into 2022 as executives swap high-stress positions […]

Read the full article