Valuing the Closely Held Firm
1st Edition
Published on 26. November 2007
288 pages
978-0-19-804127-6 (ISBN)
Description
A closely held firm is not a smaller version of a large public firm, anymore than a child is a miniature adult. Recognizing that value comes from the ability to generate future cash flows, this book emphasizes the differences between the large and small firms when presenting the concepts to value the closely held firm.
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Michael S. Long | Thomas A. Bryant
Valuing the Closely Held Firm
Book
11/2007
Oxford University Press Inc
€145.10
Shipment within 15-20 days
Content
- Intro
- Contents
- List of Tables
- List of Special Terms and Expressions
- 1. Why Bother Valuing a Private Business?
- Note to Readers
- Cast of Characters
- 1.0 Mike and Tom Begin Their Quest
- 1.1 The Importance of Knowing the Value
- 1.2 Specific Times That Require Valuation
- 1.3 How We Proceed
- 1.4 Ah! I'm Beginning to See Why!
- 2. Is It a Business, or Just a Pile of Assets? Special Questions and Adjustments in the Valuation of Closely Held Firms
- 2.0 What's It Worth?
- 2.1 Differences in Valuation Methods between Public and Closely Held Firms
- 2.2 Does a Going Concern Exist?
- 2.3 Closely Held Firms Lack Separation of Manager and Owner
- 2.4 Alternative Ways of Organizing a Firm: Adjustments for Taxes and Insider Compensation
- 2.5 How Should "Excess" Returns Be Valued?
- 2.6 An Adjustments Example
- 2.7 Just a Pile of Assets?
- 3. Valuation When a Firm Is Not a Going Concern
- 3.0 The Value of Assets
- 3.1 Valuing a Firm Both Ways
- 3.2 Valuing the Tangible Assets on a Balance Sheet
- 3.3 What Is Being Bought Other Than Tangible Assets?
- 3.4 Market Values for Uniform Parts
- 3.5 Valuing the Nonuniform Tangible Parts
- 3.6 Intangible Assets
- 3.7 Liquidation Considerations
- 3.8 Tempting Valuation Shortcuts
- 3.9 When Book Value Is Not Market Value
- 4. Valuation of a Going Concern
- 4.0 What Makes a Business a Going Concern?
- 4.1 Valuation Process: Cash Flows, Timing, and Risk
- 4.2 The Value of Current Operations
- 4.3 Estimating Future Cash Flows
- 4.4 Complications in Estimating Future ROE Values
- 4.5 Cash Flow Gives the Best Basis for Comparison
- 4.6 Watch the Cash Flow!
- 5. Growth Options and Valuation
- 5.0 The Value of Future Potential
- 5.1 Separating Growth Opportunities from Current Excess Returns
- 5.2 Subtleties of Identifying and Valuing Growth Opportunities
- 5.3 An Example of the Value Created by Excess Returns
- 5.4 Valuation in Parts: Present and Future
- 5.5 Estimating the Value of Growth Opportunities
- 5.6 What Happens When Real Growth Is Negative?
- 5.7 Keeping Up with Growth or Not: The Manager's Challenge
- 5.8 Walk or Run: In Which Direction?
- 6. Inflation and Valuation Measurement
- 6.0 Real Growth or an Illusion?
- 6.1 Equivalence of Real and Nominal Approaches to Valuation
- 6.2 Accounting Measures and Valuation Difficulties
- 6.3 Inflation Lowers the Depreciation Tax Shield
- 6.4 Conclusions about Inflation and Valuation Measurement
- 6.5 Real Value-or Inflated Mirage?
- 7. Calculating the Discount Rate for Closely Held Firms
- 7.0 Wrestling with Discount Rates
- 7.1 Required Rate of Return for a Public Firm
- 7.2 Required Rate of Return for a Closely Held Firm
- 7.3 Methods Used to Estimate the Required Return
- 7.4 Special Considerations for Closely Held Firms
- 7.5 Leverage Differences
- 7.6 An Estimate of the Required Rate of Return
- 7.7 Applying the Discount Rate
- 7.8 Discounts Redux
- 8. Planning to Buy? Considerations from the Other Side of the Sale
- 8.0 Should Tom Sell to Tracey or Mike?
- 8.1 Why Is the Firm for Sale?
- 8.2 Know What You Are Getting
- 8.3 Know What You Can Pay
- 8.4 Reorganizing the Business
- 8.5 Buying In? Remember to Price the Exit
- 8.6 Selling and Buying
- 9. The Exit Strategy
- 9.0 So, How Do I Cash Out of This Business?
- 9.1 Why Go Public? Why Not?
- 9.2 Selling the Business outside the Family
- 9.3 Insider Sales and Transfers
- 9.4 Jointly Owned Businesses
- 9.5 An Exit Plan Emerges
- 10. What We Know, Where to Go Next
- 10.0 A Different Way of Managing a Business
- 10.1 What Has Been Learned about Valuation in General?
- 10.2 What Has Been Learned about Valuing Closely Held Firms?
- 10.3 What's Left to Learn about Valuing Closely Held Firms?
- 10.4 Implications for the Management of Closely Held Firms
- 10.5 Lessons Learned?
- Appendix 1. Glossary
- A
- B
- C
- D
- E
- F
- G
- I
- L
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- N
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- P
- R
- S
- T
- V
- W
- Appendix 2. Useful Organizations and Web Sites
- Appendix 3. Annotated Bibliography
- Appendix 4. How the IRS Views Valuation of Closely Held Firms
- Appendix 5. Worksheets
- Index
- A
- B
- C
- D
- E
- F
- G
- H
- I
- K
- L
- M
- N
- O
- P
- R
- S
- T
- U
- V
- W
- Y
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