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The Dividend Discount Model (DDM): The Black Sheep of Valuation?

Brian DeChesare

The DDM is more grounded because it’s based on the company’s actual distributions and potential future value. And it values the company today based on the present value of its dividends and that potential future value (either the stock price or the Equity Value via the Terminal Value calculation).

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

Chris Mercer

Access to, availability of, and reliability of information regarding the underlying asset or entity. It is fairly standard to consider the ownership structure and configuration and influence that management might have on the value of illiquid minority interests. An asset example is included the right to partition.

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Deja Vu #10: Valuation Theory is the Same for Businesses and Business Interests: V =f(CF, G, and R)

Chris Mercer

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. These cash flows are discounted to the present at an appropriate discount rate and equity value is determined.

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How to Value an SME—An Introductory Guide

Valutico

Key Takeaways: Valuing Small and Medium-sized Enterprises (SMEs) is crucial for various financial decisions like mergers and acquisitions, investments, and reporting. It determines the economic worth of a company and is essential for informed decision-making.

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The 2023 AICPA Business Valuation Conference and One Thought on Valuation Adjustments

Chris Mercer

The expected terminal value for the illiquid investment based on the financial control value of $18.0 The present value based on these assumptions is $11.65 The expected terminal value based on a $12.0 million value with non-normalized earnings is $19.3 million is about $29.0 million ($29.0

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Issues faced when valuing a declining company

Andrew Stolz

Discount Future Cash Flows – either by using the Mid-Year discount or a simple discount period, it is fairly simple to calculate the present value of future cash flows. This causes difficulties in future performance forecasting since there is limited or no comparable historical information.

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Mercer’s Musings #5: Pre-IPO Studies/Discounts and Marketability Discounts

Chris Mercer

Economic Information in Pre-IPO Discounts? The information we can glean from this definition and example is limited to the following: A transaction occurred at some point prior to an IPO (perhaps three months, six months, nine months, or a year or more) The pre-IPO price was $6.50 per share The price at the subsequent IPO was $13.00