Correctly applying the valuation methodologies is important. Sabal (2007), using a well-designed example, shows that various methods give identical results, and asserts that APV is more convenient for the emerging market. However, a few issues are questionable which we intend to clarify,...

This study investigates a valuation adjustment, known as the discount for lack of marketability (DLOM) for private firms. By matching private company transactions with publicly traded counterparts, we find discounts that average 65-70% and exceed 80% in some sectors of the economy. Our discounts...

Risk-adjusted valuation is well established in both theory and business practice. However, its implications are not always immediately apparent or intuitive in legal disputes such as breach of contract lawsuits. In particular, damages are often calculated by discounting the differences in cash...

In the discounted cash flow model, free cash flow can be viewed as composed of four components: (i) after-tax sales revenue minus cash operating expense, minus (ii) increase in working capital, minus (iii) capital expenditures, plus (iv) tax savings from depreciation. It is unproblematic...

The effect of tax on the value of a company does not present too much difficulty as long as the company is profitable and ungeared (i.e., without debt). In case of leverage, the tax effect is quantified under the notion of tax shield, which is widely discussed in the literature. The case of...

After a brief overview of different company valuation theories, this paper presents the main functions (decision, arbitration, and argument or negotiation function) of company valuation according to the functional (i.e., purpose-oriented) theory. The main body of the paper focuses on the...