Chris Mercer
NOVEMBER 15, 2022
I have heard many appraisers suggest that one should not normalize owner compensation when valuing minority interests “because the minority shareholder cannot change compensation.” Otherwise, the appraiser is not valuing the appropriate asset. The present value based on these assumptions is $11.65
BV Specialists
JANUARY 3, 2022
Business owners likely have particular ideas about the value of their company and how best to calculate it, given their experience and knowledge of their financial history, and understanding of the market and industry in which they operate. Adjustments are made to better match the private business based on revenue and overall size.
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Chris Mercer
FEBRUARY 23, 2024
In Mercer’s Musings #2, we discussed the old and cold data on restricted stock transactions that have been misused by appraisers for decades. This conclusion applies to all appraisals, including those prepared for the Internal Revenue Service. In other words, value is a function of expected cash flow, growth, and risk.
Chris Mercer
MARCH 7, 2024
” And the answer holds regardless of any certifications appraisers might hold. Procedural Guidelines (PG) are designed to provide more detailed guidance for consideration by business appraisers than found in the base standards themselves. The value of the underlying enterprise or asset, if applicable.
Chris Mercer
JULY 15, 2022
Business appraisers routinely use the discounted cash flow model to value entire businesses. The value of all remaining cash flows after the finite forecast period is captured in the terminal value, which is, effectively, a capitalization of earnings or cash flows at the end of the forecast period.
Chris Mercer
MARCH 29, 2024
Exhibit 8.21 (Mercer-Harms Business Valuation: An Integrated Theory Third Edition ) (“IT3”) illustrates how pre-IPO discounts are calculated. Whether there was a formal appraisal or not at the pre-IPO transaction date, there was an implied marketable minority/financial control (base) value for that entity at that date.
Chris Mercer
MARCH 8, 2023
” We look at this “discount” from the vantage points of the definition of fair market value, the integrated theory of business valuation, and recurring and incorrect rationales for the discount. This post is the first in a series of posts in which we will discuss fair market value in more detail.
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