... ABV, of American Business Appraisers, San Francisco, Cali-
fornia; email: mjeaba@pacbell.com.
240 Measuring and Managing Value in High-Tech Start-Ups
and margins must be scrutinized carefully. ... stock
of either a publicly or a privately held company may be more com-
plex and require careful examination.
2 38 Measuring and Managing Value in High-Tech Start-Ups
companies genera...
... items or
nonmarket base compensation to shareholders.
Risk management techniques are also available for use in val-
uation for M& amp ;A. Most commonly these involve traditional statisti-
cal parameters ... the most accurate in assessing the cost of capital for a
business and gauging general company and market risk, additional
risk analysis tools are available. M& amp ;A invest...
... equity in a
privately held company, with the most common application being
for those businesses that are viable candidates to become public
companies. The CAPM often is inappropriate for valuing private
companies ... company carries debt securities that have interest rates
that are materially above or below market rates as of the valuation
date, the market value of the debt m...
... op-
erate a company and to make sound estimates of value. In the
merger and acquisition (M& amp ;A) world, however, much of the real
action takes place after stand-alone fair market value and invest-
ment ... approach is less widely employed in M& amp ;A val-
uations than the income approach, values determined by it also
require careful review. Because the market approach primaril...
... stores and corner newsstands,
2 48 Measuring and Managing Value in High-Tech Start-Ups
accurately portrays value- creating performance. While traditional
companies generate earnings and cash outflows ... level and
enthusiasm for the day-to-day challenges of the company are de-
clining, and Cardinal is facing substantial increased competition
from full-line “media” companies. Much...
... the
valuation of companies. A must read!”
Steven F. Schroeder, JD, ASA, FIBA, MCBA
Economic and Valuation Services
Richard M. Wise, FCA, FCBV, ASA, MCBA
Wise, Blackman, CA
Jay Fishman, ASA
Principal
Kroll ... 76
Key Variables in Assessing Synergies 80
Synergy and Advanced Planning 81
CHAPTER 6 Valuation Approaches and Fundamentals 85
Business Valuation Approaches 85
Usin...
... valuing a company for merger and acquisi-
tion, performance improvement, or any other reason, competitive
analysis is an essential step.
Many people see valuation as primarily a financial calcula-
tion. ... timeliness of accounting information
and internal control
Although business valuation involves many financial calcula-
tions, it is not primarily a financial activity, particul...
... results in a more thorough and accurate analysis.
While larger companies have M& amp ;A or business development
departments, those that lack this capacity internally may have to
add external legal, tax, ... investment value of the target but not its fair
market value. The combination also may lower the combined en-
tity’s financing costs and may allow for efficiencies in lease...
... performance or financial position may dis-
close different information about the target company. Market data
and company performance may allow use of only certain multi-
ples. For example, in ... result from using historical measures of
earnings compared to dubious book values. As explained in
Chapter 2, valid rates are derived by comparing current cash
investments at market value aga...
... approach, adjustments for
182 Asset Approach
5. Ending point. From the adjustments, prepare a balance sheet
that reflects all items at market value. From this amount,
determine the adjusted value ... be
considered for each value indicated because adjustments that are
appropriate for one indicated value may not apply to another. This
point is emphasized because a common error...