Brian DeChesare

MAY 3, 2023

When I started offering financial modeling training , I never expected to get questions about a methodology like the Dividend Discount Model (DDM). Otherwise, the written version follows: Why Use a Dividend Discount Model? If you sum up these numbers, you can see whether the company is valued appropriately.

Dividends 64

Dividends Terminal Value Enterprise Value Equity 64

Valutico

AUGUST 30, 2023

In particular, the Terminal Growth Rate is used in a DCF analysis to help calculate the Terminal Value. The Terminal Growth Rate and the Terminal Value are important figures in valuations, because they usually represent a significant contributor to the final valuation estimate.

Terminal Value 98

Terminal Value Dividends Weighted Average Cost of Capital Discounted Cash Flow 98

Chris Mercer

AUGUST 1, 2022

This eleventh post in the Deja Vu series involving restricted stock studies addresses an issue that is rarely mentioned in the context of the studies – of the impact of dividends on restricted stock discounts (RSDs). Of these 244 transactions, only 24 involved companies that paid dividends, or less than 10% of the transactions.

Dividends 52

Dividends Appraisal Marketability Start-ups 52

Chris Mercer

FEBRUARY 23, 2024

My conclusion is that the various restricted stock studies are inadequate to meet current business valuation standards and that they should not be used as a basis for “guessing” the magnitude of marketability discounts for illiquid interests of closely held businesses.

Marketability 52

Marketability Terminal Value Dividends Discounted Cash Flow 52

Chris Mercer

JULY 15, 2022

While a growing number of appraisers use a discounted cash flow model to value illiquid minority interests of businesses ( 22% according to a recent Business Valuation Resources Survey ), the majority of appraisers continue to rely on restricted stock studies and pre-IPO studies in their marketability discount determinations.

Discounted Cash Flow 52

Discounted Cash Flow Terminal Value Dividends Appraisal 52

Chris Mercer

MARCH 7, 2024

The second and third musings address the issue of marketability discounts and conclude that it is not possible to comply with any valuation standards, whether USPAP or not, using only averages of restricted stock studies as a basis for “guessing” marketability discounts. The relevant pool of potential buyers, if any.

Dividends 52

Dividends Appraisal Terminal Value Business Valuation 52

Chris Mercer

MARCH 8, 2023

This post provides a discussion of several implications of the definition of the standard of value known as fair market value. We focus first on the definition of fair market value. We then look at the implications for the so-called “marketability discount for controlling interests.”

Fair Market Value 52

Fair Market Value Marketability Appraisal Business Valuation 52