Two sets of financial statements for a company that cover the same time period can both be technically correct yet display dramatically different values. The key to effective financial discovery means knowing what to request.
Mergers and acquisitions in Texas reflect the state’s business success. With energy companies leading the way, almost $60 billion of deals were announced during the first half of 2013, with a slightly larger amount during the same period of 2012, according to Mergermarket.
We have recommended regularly the selection of one “neutral”¹ appraiser selected jointly by opposing parties to resolve valuation disputes. Each party should be advised by a valuation professional not only in the selection of the neutral appraiser but in the assignment to be given to the neutral appraiser. A key aspect of the assignment is […]
This is a common exercise to determine amounts due. As a rule, the rate used should match the characteristics of the cash flows to be discounted. In practice, cash flows may comprise more than one type of debt or a hybrid of debt and equity or equity only. We were presented with an assignment to […]
Anything liquid (able to be turned readily into cash) has to be marketable, but the reverse is not necessarily true. For example, a 100 percent controlling interest in a private company is generally marketable, but not liquid. Likewise, real estate is marketable yet illiquid because it takes time to turn a parcel of real estate into […]
When valuing a business under the income method, a discount rate is used to discount future cash flows to present value. This discount rate, also known as the cost of capital, represents the expected rate of return available in the market from other investments that are comparable in terms of risk and other investment characteristics, […]
Compensation paid to shareholders who are also executives becomes an issue in valuation when deciding whether an executive is being reasonably paid for his services or instead is being paid because of his shareholding. Compensation studies may be helpful as to the market for an executive’s services, but more complete analyses appear in tax court […]