...Valuation of Intellectual Property: Approaches We have moved into an information age characterized by increasing competition and shorter product life cycles; companies are more dependent on their intellectual properties (IP), as it has being recognized as a Valuable Business Asset. The Value of IP is much different & Valuation is much difficult than the value of any other assets. IP is creation of Human mind but to know the value or to trade that property we have to “value” them. The three main approaches are Market Approach, Income Approach & Cost Approach. Introduction Business enterprise is comprised of Working Capital, Fixed Assets, Intangible Assets and Intellectual Property. The increasing challenges of corporate world everyone wants to earn competitive advantages over others resulting into more dependence on Intellectual Property . Intangible assets Working Business Fixed Capital Enterprise Assets Intellectual Property According to economic theory, the value of an asset is best determined by the market, in the form of a transaction between two unrelated entities dealing at arm’s length. Unfortunately, intangible assets and IP that will eventually support products seldom benefit from open market conditions, either due to novelty or secrecy factors. In consideration of the growing investments required to develop and market products, there is a growing need for assessing the economic value of...
Words: 1278 - Pages: 6
...Executive Summary The primary purpose of this paper is to examine the various valuation factors that affect the financial performance of a particular company. This paper also includes research which involves a current literature review about the possible causes of both positive and negative outcomes of a company’s financial performance. The methodology used is qualitative research. The major findings entail that the nature of the business and its history is the greatest factor that most likely should be the central focus of the business itself. It can then be realized that the company’s value can be best assessed once it is determined that it has stayed in the industry for a long period of time. Introduction The business industry, above all else, is considerably one of the most complicated sectors of the economy. Nonetheless, businesses are, up to the extent, concentrated on providing the best to their customers and at the same time, on performing well in the market. So to say, the primary goal of any company is to become globally competent and successful in the industry. This objective is what mostly keeps the companies driven to continuously improve itself, its processes, its products and its services. In light with all of this, the value of companies is chiefly influenced by several factors. These factors somehow contribute to the outcomes of the financial performance of the company. More than that, these aspects are deemed to be the most important that every...
Words: 1628 - Pages: 7
...|IPO Valuation Procedure in Bangladesh | | | | | | | Internship Report IPO Valuation Procedure in Bangladesh Prepared for: Professor Shakil Huda Chairman IBA Career Center Institute of Business Administration University of Dhaka Supervised by: MsSyedaMahrufa Bashar Lecturer Institute of Business Administration University of Dhaka Prepared by: Asif Rezwan Roll: 64, MBA 44D and Management Trainee Officer, LankaBangla Investments Limited Institute of Business Administration University of Dhaka June 24, 2012 June 24, 2012 MS. Kanij Fahmida Assistant Professor Department of Accounting Faculty of Business Studies Bangladesh University of Business & Technology(BUBT) Dear Sir, Subject: Letter of Transmittal for Internship Report I, Ibna Shina Shibly, am submitting my internship report on “IPO Valuation Procedure in Bangladesh”. The internship period and the subsequent effort in writing this...
Words: 7525 - Pages: 31
...Running Head: COMPANY VALUATION Company Valuation [Name of writer] [Name of institute] Company Valuation Introduction This is the case of a partnership business, Midwest Lightning Inc. (MLI) partnered between two entrepreneurs Jack Peterson and David Scott. Over the years these two partners have developed differences, which have escalated to the point of separation. Hence, in this assignment we are going to provide solution that would be required as the partnership culminates. Overview of the case The partners of the company Midwest Lightning have over the years developed differences and they are now at complete 180 degrees when it comes to their views about the business. The solution that has been suggested is that the partnership should end as the differences have become irreconcilable. In the course of separation, various issues have now arisen, regarding the valuation of the company and how much worth each partner should be accrued in the event of separation. 1) Evaluation of the company-Buy and Sell bids Allen Burke, the accountant of Jack Peterson and David Scott suggested a bid agreement. The agreement finalised was that both owners had agreed on the signing of a mutual buyout agreement. The agreement mentioned that the owners were to submit a secret bid in relation to what the other owner’s half of the business should be. The partner that would offer the maximum price would then buy out the share of other partner. A minimum...
Words: 1504 - Pages: 7
...In financial markets, stock valuation is the method of calculating theoretical values of companies and their stocks. The main use of these methods is to predict future market prices, or more generally, potential market prices, and thus to profit from price movement – stocks that are judged undervalued (with respect to their theoretical value) are bought, while stocks that are judged overvalued are sold, in the expectation that undervalued stocks will, on the whole, rise in value, while overvalued stocks will, on the whole, fall. In the view of fundamental analysis, stock valuation based on fundamentals aims to give an estimate of their intrinsic value of the stock, based on predictions of the future cash flows and profitability of the business. Fundamental analysis may be replaced or augmented by market criteria – what the market will pay for the stock, without any necessary notion of intrinsic value. These can be combined as "predictions of future cash flows/profits (fundamental)", together with "what will the market pay for these profits?" These can be seen as "supply and demand" sides – what underlies the supply (of stock), and what drives the (market) demand for stock? In the view of others, such as John Maynard Keynes, stock valuation is not a prediction but a convention, which serves to facilitate investment and ensure that stocks are liquid, despite being underpinned by an illiquid business and its illiquid investments, such as factories. Contents [hide]...
Words: 4315 - Pages: 18
...Business Valuation Sample Company, Inc. as of December 31, 200X BUSINESS VALUATIONS & STRATEGIES 3402 N. 4 Street, Harrisburg, PA 17110 Phone: 717-234-7060 Fax: 866-482-3097 Web site: www.business-valuation-expert.com th David E. Coffman CPA/ABV, CVA Email: dave@business-valuation-expert.com 7$%/( 2) &217(176 CONCLUSION OF VALUE ...................................................................................................................................1 VALUATION SUMMARY .....................................................................................................................................2 ANALYSIS OF THE COMPANY ..........................................................................................................................3 DESCRIPTION AND HISTORY OF BUSINESS .............................................................................................................3 OPERATIONS ...........................................................................................................................................................3 MANAGEMENT .......................................................................................................................................................3 WORKFORCE ..........................................................................................................................................................3 SALES & MARKETING ........................................................
Words: 11286 - Pages: 46
...PLEKHANOV RUSSIAN UNIVERSITY OF ECONOMICS INTERNATIONAL BUSINESS SCHOOL COURSE WORK « Business Valuation on the basis of Damodaran model » Corporate Finance Student: Pavel Terefera Supervisor: Irina Sokolnikova Moscow 2015 Contents Introduction _____________________________________________ 3 Chapter 1. Valuation______________________________________ 4 1.1 Valuation in portfolio management_________________________ 7 1.2 Valuation in acquisition__________________________________ 10 1.3 Valuation in corporate finance_____________________________ 10 Chapter 2. Approaches to Valuation___________________________ 11 2.1 Profitable Approach_____________________________________ 12 2.1.2 Income capitalization approach __________________________ 12 2.1.3Method of discounted cash flows__________________________ 14 2.1.4 Discounted Cash Flow Valuation on example of JSC NLMK____ 20 2.2 Relative Valuation Approach______________________________ 23 Conclusion _______________________________________________ 28 Bibliography ______________________________________________ 29 Introduction. Knowing the value of an asset may not be a guarantee for success for investor, but it does help us make more informed judgments. A postulate of sound investing is that an investor does not pay more for an asset than its worth. In conditions of market economy when all transactions are made "on fear and risk" their participants, both seller...
Words: 8836 - Pages: 36
...Individual Research Project: Oracle Corporation - Business Structure and Valuation. Executive Summary This research project summarizes the business of Oracle Corporation (Oracle), the company’s key competitive advantage factors and the valuation of the company. In this summary, the corporate structure of Oracle, the company’s business and competitive advantage and the valuation of the company are discussed. Oracle is involved in the business of providing enterprise resource software to its customers and clients. This paper is structured into 3 sections. • Section 1 – This section discusses Oracle’s business of providing enterprise resource software. • Section 2 – This section discusses Oracle’s key competitive advantages within its industry. • Section 3 – This section describes the valuation approaches and methods utilized in arriving at a valuation for Oracle Corporation. Table of Contents Section 1 – The Need for Business Valuation. -1- Section 2 – Scope of SSVS1 -2- Section 3 – Valuation Approaches and Methods -3- Section 4 – The Valuation Report -4- Conclusion -4- Bibliography -5- Section 1 The Need for Business Valuation Noting the number of transactions (mergers, acquisitions, initial public offerings (IPOs), etc.), litigations (contractual disputes, bankruptcies, intellectual property...
Words: 1370 - Pages: 6
...Cash Flows For Equity Valuation: Pitfalls and Possible Solutions by Juliet Estridge and Barbara Lougee, provides a guide to cash flows definition that aims to helps inventors avoid common pitfalls while providing inside to corporate performance and value. This article looks at two different valuation methods along with corresponding studies and evidence. The article begins with the definition of value and “free cash flow”. Miller and Modigliani demonstrate that the value of the company is the present value of its future expected operating profits net of the new capital investment required to sustain the business. Using this basic analytical framework, M&M came up with two valuation approaches: discounted cash flow approach and investment opportunities approach. Joel Stern recognizes the term “free cash flow” as net operating profits after taxes minus the amount of new capital invested. However, accounting methodologies pose limits on valuations metrics: inconsistency, misclassification, ease of manipulation, and measurement errors. The article provides an example of the difference measures used for cash flow among various companies such as P&G, The Gap, and others. The first valuation method is multiples, which include only recurring or sustainable cash flows and excludes discretionary cash flows. The article shows an example of the price to free cash flow multiple (P/FCF) and “cash flow to yield” (FCFfY) as an increasingly popular valuation tool. However, the problem...
Words: 376 - Pages: 2
...a multiples analysis, calculating and defending an estimate of Crocs value. Soln: Comparable companies analysis – Done to determine appropriate valuation multiple for Crocs, Inc. • • Selected peer group based on industry, business and financial characteristics Included explosive growth stocks such as Lulelemon & Under Armour having similar prospects for growth and ROIC as Crocs, Inc. and some mature, stabilized businesses with stable industry growth rates – Nike, Deckers & Timberland. This mix will help us provide valuation from an aggressive sales growth and maturing sales context. Some characteristics used in selection include – o Primary or at least significant portion of business revenue comes from footwear & apparel – analogous to Crocs primary business o Has product appeal to large group of customers o Has distinct product attributes (innovative/creative) and differentiation from competition o Has wide range of distribution channels o CAGR Sales growth, COGS to Sales & Significantly less debt exposure on their balance sheets o Have characteristics of high octane growth and show signs of maturity and stabilizing long-term growth similar to well established footwear brands. • Valuation Multiples The objective was to compare operating metrics and valuation multiples in a peer group to that of Crocs, Inc. for equity valuation. The market multiple model is based on the idea that on average, a company, over time would have roughly the same value as its peers. Assumption:...
Words: 2072 - Pages: 9
...2 Graduate Thesis By Teia R. Merring Copenhagen Business School Strategic and financial analysis and valuation of B&O 0 1 Executive Summary................................................................................2 Introduction............................................................................................6 1.1Motivation.................................................................................................................. 6 1.2Problem Specification................................................................................................ 8 1.3Problem Identification................................................................................................ 8 1.4Problem Handling .................................................................................................... 10 1.5Structure and Methodology...................................................................................... 12 1.5.1Introduction and Presentation........................................................................... 12 1.5.2Strategic Analysis............................................................................................. 12 1.5.3Financial Statement Analysis ........................................................................... 13 1.5.4Prognoses and Budgets..................................................................................... 14 1.5.5Valuation.......................................
Words: 60014 - Pages: 241
...According to 820-10-35-54-c, it was reasonable to determine that market is not active. Because the adjustments were based on management’s assumption, FFC didn’t used level 1 inputs in the income approach valuation technique (present value technique). In addition, significant adjustment inputs includes credit adjustment (level 3 inputs) and liquidity risk adjustment (level 3 inputs), and implied rate of return (level 2 inputs) under ASC 820-10-35-48/52. According to ASC 820-10-35-37A, when the inputs are categorized within different levels of the hierarchy, the entire instrument should be in the same level of hierarchy as the lowest level inputs that is significant to the entire measurement. So, CDO should be categorized within level 3 of the fair value hierarchy. Instrument 2 There was no significant decrease in the volume and activity for the MBS, because no significant factors occurred. Therefore, the market should be still active, even the market became increasingly volatile with some declined activity in the Q4 2012. In my opinion, FFC should still use market approach valuation because (1) quoted prices were highest priority inputs in accordance with ASC 820-10-35-37 (2) the theoretical income-approach pricing model needed significant assumption. In the market approach valuation, quoted prices for the similar observed transactions was level 2 inputs. Then, FFC should classify the MBS into level 2 of the fair value hierarchy. Instrument 3 According to...
Words: 775 - Pages: 4
...on the corresponding valuation date of every Individual; Hindu Undivided Family and Company at the rate of 1% of the amount by which the net wealth exceeds Rs.15 Lakhs. Education Cess of 3% is not leviable on the amount of Wealth Tax. Applicability of wealth tax: 1. Individual: The following persons treated as ‘individual’ u/s 3 of the wealth tax. a) Legal hires of an Individual. b) Holder of an impartible estate. c) Hindu deities (it means formal a god/goddess ) d) Trustees of a trust who are liable u/s 21A. e) Trade unions 2. HUF 3. Company 4. AOP chargeable u/s 21AA : Situation Shares of members of an AOP are determinate or known. Shares of members of an AOP are indeterminate or unknown. Wealth Tax assessment Interest of members in the assets of the AOP shall be valued as per Rule 16 and 17 of Schedule III. Wealth tax is levied on the AOP. It is liable to tax at the rate leviable upon and recoverable from an individual who is any Indian citizen and resident. Valuation Date: Sec.2 (q): It refers to the 31st March immediately preceeding the assessment year. This provision does not apply to – a. Company registered U/s 25 of the companies Act, 1956 b. Cooperative society and c. Any social club d. Any political party e. Any mutual fund U/s 10(23D) CHARGEABILITY Individual HUF / Companies Nationality Residential Status Location of assets as on the valuation date Residential Status Location of assets as on the valuation date Direct Tax...
Words: 12386 - Pages: 50
...Case #1. Liston Mechanics Corporation DEADLINE. 4TH CLASS, END OF CLASS SUBMISSION: BY EMAIL AT SAUGUSTE@UTDT.EDU This case gives you an overview of three DCF-based valuation variants (FCFF, FCFE, and APV), relative valuation via comps, and relative valuation via trans. Please use exclusively the data in the case. PART A You must compute the Equity Value of Liston Corp., on a stand-alone basis (i.e., pre-acquisition), for Jim Liston, by doing the following: 1. Use DCF via FCFF discounted at constant target WACC to compute the value of the company and equity. 2. Now check: does the actual D/A ratio (i.e., after your valuation) match the target D/A? If not, find the amount of initial debt that should be used to force a match between actual and target D/A. Using that debt value, recompute Equity. 3. Using the amount of debt you calculated in the previous step as a fixed amount over the planning horizon, perform a valuation via FCFE discounted at constant Ce. What could be wrong with this procedure? 4. Now perform APV with constant debt (again at the fixed level computed in Step 2) and include default risk by discounting tax benefits at the unlevered Ce. 5. Perform APV with constant debt (again at same debt level) but this time, account for default risk by discounting tax benefits at Cd AND by adding a negative term equal to 15% of unlevered EV. 6. Using the original debt amount of Liston (i.e., $ 140 million), compute Equity via comps using EV/Sales...
Words: 347 - Pages: 2
...Valuation is the estimation of an asset’s value, whether real or financial, based on variables perceived to be related to future investment returns, on comparison with similar assets, or, when relevant, on estimates of immediate liquidation proceeds (Pinto, Henry, Robinson, Stowe; 2010). Correct valuation of real assets can present challenges to financial analysts. Different models can be used to arrive at the closest estimate of value and yet certain issues will always arise. This case attempts to tackle two approaches in real asset valuation: Discounted Cash Flow (DCF) analysis and the issues surrounding such, as well as the Black-Scholes Model for Real Options. Questions to be addressed in the study are: 1. Evaluate Amoco’s and Apache’s corporate objectives and strategies. Is it reasonable to expect that the MW properties are more valuable to Apache than to Amoco? What sources of value most plausibly account for the difference between buyer and seller? 2. Structure and execute a DCF valuation of all the MW reserves. How much are the reserves worth? Is your estimate more likely to be biased high or low? What are the sources of bias? 3. How would you structure an analysis of MW as a portfolio of assets in place and options? Specifically, which parts of the business should be regarded as assets in place and which as options? What kinds of options are present? Should this approach yield a higher or lower value that the DCF approach? 4. Execute the analysis you structured in...
Words: 996 - Pages: 4
