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Mercer’s Musings #4: Factors to Consider in Valuing Partial Ownership Interests

Chris Mercer

Provisions in the organizational and governance documents that affect the rights, restrictions, marketability and liquidity of the subject interest. Defined expiration or termination dates contained in the governing documents, or other external factors, that may precipitate a foreseeable liquidation or sale of the underlying entity.

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M&A Terms Every Business Owner Should Know

Class VI Partner

To compute the enterprise value, the free cash flows are discounted back to present value at a rate that reflects the risk as estimated by the buyer or seller (which rates will often differ based on their respective assessments of the level of risk in a company).