The Valuation of Financial Companies: Tools and Techniques to Measure the Value of Banks, Insurance Companies and Other Financial Institutions

10

The Valuation of Other Financial Companies

Although the intermediation activity carried out by banks and insurers covers the largest chunk of the finance industry, other niche finance companies have emerged over time and do coexist with the traditional players. Such finance companies are either specialized subsidiaries of financial institutions or independent organizations. Mostly, these companies can be valued using the methods we have already presented in Chapter 5 and 9, but some aspects deserve further consideration. Finally, funds nowadays represent the leading force of financial markets at large, and we will touch briefly on some valuation issues related to them.

10.1 THE VALUATION OF FINANCE COMPANIES

Innovation, regulation, and country-specific consumer behavior gave rise to a wide array of companies offering specialized financial services and products. Among them and without this list being exhaustive:

• Consumer loan companies mostly provide financing for the customers of retailers or wholesalers either directly or via a credit card system. Personal loans are typically offered to individuals to finance purchases of goods (i.e., automobiles, large household items), or even to buy real estate properties.
• Asset management companies do professionally manage investments in various securities (shares, bonds, and other securities) and assets (e.g., real estates) in order to meet specified investment goals for the benefit of the (institutional or private) investors.
• Business ...