The pricing mechanism is that part of a buy-sell agreement that defines how the price for transactions triggered under it will be determined. There are three basic types of pricing mechanisms: Fixed price buy-sell agreements. The price at which transactions occur is set by agreement of the parties within some buy-sell agreements. The price is set […]
Over the years, I have been called upon to review the work of other appraisers and damages experts. To a certain extent, the requirements for appraisal review come with the territory of being an expert witness. Appraisers for a side in litigation are often asked to review the work of the opposing expert. In the […]
The idea of normalizing Treasury yields when building up equity discount rates has been around for about a decade. I do not believe that “normalizing” Treasury rates when building up discount rates is a procedure that should be used by business appraisers. This post provides the rationale for this position.
In the last post, we talked about the traditional levels of value chart; however, by the mid to latter 1990s, many business appraisers began to realize that there were problems with using control premium data (used to “move” from the marketable minority level to the controlling interest level) to estimate minority interest discounts. The main issue was that most transactions involving the change of control of public companies, from which this data was developed, involved strategic control or synergistic acquisitions. The thinking led to the development of a new levels of value chart.