How to reduce biases on the judgement on valuation?

This topic contains 2 replies, has 3 voices, and was last updated by  Chris King 10 months ago.

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  • #67276

    Lisa Chan
    Participant

    There could be tangible assets of the Target not measured and reflected in the financial projection model for valuation. Examples are quality and fit of the Target’s management team, company culture, intellectual property and trade secrets.

    #67663

    Albert TAN
    Participant

    Recommend use international valuation standards, and examine your valuation assumptions. Factor in discount or allowances into your valuation calculations so that it will reduce the valuation biases, like a controlling shareholder will have a premium as opposed to minority shareholder.

    #103117

    Chris King
    Participant

    1) What are the assumptions used in the cash flow model. Are Revenue and Operating Income growth numbers realistic?
    2) Use of management projections. When were they prepared (ie for use in valuation) are they materially different then other recent projections.
    3) Projected profit margins are different from historical results (Gross Profit / EBITDA / Pretax income? Why?
    4) Anticipated Capital Expenditures were not accounted for.
    5) How does the valuation multiple used for the valuation compare to other transactions for similar companies during a similar period of time.

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