The Valuation Handbook: Valuation Techniques from Today's Top Practitioners

CHAPTER 23

Common Themes and Differences

Debates and Associated Issues Facing the Profession

 

Rawley Thomas

President, LifeCycle Returns, Inc.

 

 

The Preface suggested that valuations are important simply because they form the basis for making decisions involving significant amounts of money or wealth transferred from one party to another.

The following partial list covers many decision applications for valuation. Valuations are normally done to:

• Buy or sell publicly held stock.

• Buy or sell a privately held business.

• Determine how much estate tax is owed the government.

• Settle a divorce.

• Resolve a dispute with a minority shareholder who wants to receive full value for his or her stock.

• Give a value basis to accounting auditors.

• Determine the compensation amount for executives, division or business unit managers, or employee-owners.

• Determine to proceed (or not) with strategic initiatives and/or major investment opportunities.

• Offer fairness opinions in the purchase or sale of companies.

The Valuation Handbook has provided the unique perspectives from many of today’s top practitioners. Some authors covered labor-intensive techniques, in which expert analyst judgment is paramount. Other authors proposed expert or automated systems with minimal analyst judgment. Some described the valuation of publicly held firms. Others displayed techniques utilized on privately held firms to satisfy compliance standards of law and legal precedents. Clearly, the techniques to be used rely ...