... ______
Computation of the Stand-Alone Fair Market Value 261
248 Measuring and Managing Value in High-Tech Start-Ups
accurately portrays value- creating performance. While traditional
companies generate ... experienced team of legal, tax, and valuation
advisers to determine the fair market value of Cardinal as a stand-
alone business, its maximum value to Omni including synerg...
... 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...
... different information about the target company. Market data
and company performance may allow use of only certain multi-
ples. For example, in technology or emerging industries, where
many guideline companies ... not a
measure of value) . This multiple used to be popular
in M& amp ;A valuation in the banking industry. Although
commonly quoted, it is seldom a reliable measur...
... fair market value deter-
mination and for the strategic buyer in the investment value de-
termination. Those parties typically make estimates and assump-
tions based on the facts and circumstances ... planning. To
254 Merger and Acquisition Valuation Case Study
begin this process, Cardinal’s stand-alone fair market value is de-
termined, first using net income to invested capital...
... 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 ... some but not all of its financing
costs. So capital providers are left uninformed about their
real cash return.
VALUATION FOR M& amp ;A
Building Value in
Private...
... 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...
... 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...
... which in the
process generally improves the information that is available
to their management. Such data is frequently lacking in
smaller businesses, a fact that may hamper management’s
assessment ... fixed.
2
2
Jay Shanken and Clifford W. Smith, “Implications of Capital Markets Research for
Corporate Finance,” Financial Management 25 (Spring 199 6), pp. 98 –104.
114 Income Approach:...
... 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 in business valua-
tion ... of Business Valuation
Approaches
Income Approach Market Approach
a
Asset Approach
The company derives
significant value from its
operations.
The company generates
a posi...