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This discussion will focus on the following: * Alternative standards of value and implications for valuation: value in use v. exchange * Representative case precedent * The market approach and alternative methods: guideline public company method and guideline transaction method * Transaction considerations: the purpose of the transaction, motivation of the buyer/seller, financial v. synergistic buyers, distressed sales * Importance of transaction terms: stock or asset deal, cash deal, seller-financing, contingent consideration, and non-compete agreements * Availability of relevant financial information to assess trends, profitability, growth prospects; identify required normalization adjustments; and identify specific company risk factors (depth of management, customer concentration, leverage) * Availability of data to assess types of products and services offered by the company * Availability of data to permit analysis of the geographic markets and customer base served * Assessment of the transaction date and whether the transaction multiple reflects current economic, industry, and market conditions
Learning Objectives:
Determine when it is appropriate to use the guideline transaction method
Identify the importance of transaction terms: stock or asset deal, cash deal, seller-financing, contingent consideration, and non-compete agreements