Ratio analysis is generally presented as something that has to be calculated after completing other financial statements and is generally viewed, particularly by students, as busy-work with little value. This paper changes the context of ratio analysis in order to demonstrate how a focus on the...

This paper demonstrates that control premiums are warranted in the valuation of closely-held firms when perquisites exist. The value of control is a function of the ownership structure and the size of perquisite cash flows. The conventional logic of assigning control premiums based upon...

Outside shareholders should benefit when the firm issues common stock through a private placement. Our propositions are (1) that the private issue of common equity creates a value-maximizing insider that has the incentive and ability to monitor and discipline, and thereby reduce agency costs and...

For the most part, closely-held firms must be valued using proxies for market data which are not available. Valuation approaches described in the literature are used by practitioners with exceptions demanded by circumstances. Results of the survey confirm statements of others that substantial...

In planning for succession of ownership, oftentimes the owner of a private business seeks to sell the business to either family members or employees. Arranging outside financing may be difficult or costly, making internal financing attractive. Self-cancelling installment notes (SCINs) provide an...

There are about 24 million businesses in the United States, with something less than one-tenth of one percent actively traded. This case is hypothetical, but the valuation issues pertaining to many of those closely-held firms are real. The case illustrates an income statement adjustment,...

This study examines the relationship between venture capitalist actions and the eventual disposition of a venture through an IPO, which is the most profitable exit strategy. The actions included in this study were ( 1) altering the amount of their investment; ( 2) securing a concentrated equity...

This paper presents a new method for valuing early stage ventures, a method which views new ventures as multi-stage call options. It examines the traditional methods for valuing such ventures--the ubiquitous Discounted Cash Flow (DCF) Method using a risk adjusted discount rate, and the Venture...

We empirically examine a sample of over 350 entrepreneurial firms that successfully receive an SBA guaranteed loan. The first portion of the paper contains descriptive statistics that lend anecdotal evidence concerning the organization type of borrowers, the incidence of collateral, the reasons...

A discount for the lack of marketability is the implicit cost of quickly monetizing a non-marketable asset at its current value. These discounts are used in many venues to determine the fair market value of a non-marketable asset such as a privately-held business. There has been much written on...