Business Valuation An Integrated Theory 2nd Edition Z. Christopher Mercer, Travis W. Harms - Solutions

In valuing illiquid interests of private businesses, why do appraisers normally begin with appraisals at the marketability minority level of value?
What are the differences in fundamental adjustments applied to equity versus total capital valuation metrics?
What are fundamental adjustments, and how should appraisers determine and apply them?
In valuing illiquid interests in private businesses, why do appraisers normally begin with appraisals at the marketability minority level of value?
Should those same control premium studies be used to estimate minority interest discounts for asset holding entities?
Should those same control premium studies be used to estimate minority interest discounts for operating companies?
Should appraisers rely on Mergerstat/Shannon Pratt’s Control Premium Study and other control premium studies to determine the magnitude of control premiums applicable to ‘‘marketable minority’’ value indications?
When valuing minority interests in private companies, should appraisers normalize earnings?a. If yes, what kinds of normalizing adjustments should be made?b. What is the objective of making normalizing adjustments?
What does the term marketable minority level of value represent in the context of public security values?
Why are normalizing adjustments appropriate?
When applying the DCF method, should appraisers apply control premiums to develop controlling interest values? If so, why? And where?
In the context of fair market value, should control premiums always be applied to develop controlling interest value indications?a. If a control premium is applied, what data should be used to estimate it?b. How can the reasonableness of control premiums be tested?c. Are control premiums economic
What are the differences between normalizing adjustments to the earnings stream and control adjustments?
What is the relationship between the discount rates applicable to minority interests in a business enterprise and the discount rates applicable to the enterprise as a whole?
Why is the concept of the expected holding period an integral element in the valuation of nonmarketable minority interests in enterprises?
In valuing nonmarketable interests in private businesses, why do appraisers normally begin with appraisals at the marketable minority level of value?
What is the relationship between the standard of fair market value and the strategic control level of value?
What are the similarities and differences between a restricted stock discount observed when public companies issue restricted shares and marketability discounts applicable to minority interests in private companies?
Using the levels of value framework, can the following phenomena be explained or described?a. The existence of control premiums when public companies sell.b. Most public companies do not sell in any given period.c. Illiquid minority interests often sell for less than their pro rata share of
What are the economic factors that give rise to the marketability discount?
Are marketability discounts applicable to 100% controlling interests of companies?
When using guideline public company multiples, should appraisers apply control premiums to the resulting ‘‘marketable minority’’ value indications?
When valuing minority interests of private companies, should appraisers normalize earnings?a. What are normalizing adjustments?b. What kinds of normalizing adjustments should be made?c. What is the objective of making normalizing adjustments?d. What is the difference between normalizing and control
What does the term marketable minority level of value mean in the context of public security values?
When applying the DCF method, should appraisers apply control premiums when developing controlling interest values? If so, why? And where?
What factors give rise to ‘‘strategic control premiums’’?
What factors give rise to ‘‘financial control premiums’’?
In the context of fair market value, should control premiums be applied‘‘automatically’’ in developing controlling interest value indications?a. If a control premium is applied, what types of data from the marketplace should be used to estimate it?b. If appropriate, to what valuation base
What are the theoretical reasons for the existence of a control premium?
If a minority interest is worth less than its pro rata share of an enterprise, what causes this diminution in value?
What is the source of value for an interest in a business enterprise?
How can business appraisers test the reasonableness of their valuation assumptions and conclusions?
Where does the generalized valuation model, Value = Earnings ×Multiple, come from?
When capitalizing net income rather than net cash flow, should adjustment factors to r, the discount rate, be applied?
How fast can the earnings of an enterprise reasonably be expected to grow?
Are the DCF and single-period income capitalization methods intrinsically different?
What is the difference between the expected growth rate in the core earnings of a business and its expected growth rate in value?
When applying the DCF method, is the appropriate measure of benefits for discounting net income or net cash flow?
What is the relationship between the net income and the net cash flow of business enterprises?
What are the conditions that define g, the long-term growth rate of core earnings used in the Gordon Model?
Where does the generalized valuation model, Value = Earnings ×Multiple, come from?
What are the necessary conditions for use of the Gordon Model?

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