Acquisition discount and valuation effect of private M&amp;As in China

Dong, Jun; Jiao, Danxiao; Sun, Xiaorui

doi:10.1007/s11424-017-5274-x

Cited by 2 publications

(1 citation statement)

References 25 publications

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“…The use of market valuation multiples has become very important (Covrig & McConaughy, 2015;Dong, Jiao, & Sun, 2017;Ferraro, 2017;Serra & Fávero, 2017;Gupta, 2018). Its use is recommended by both international accounting standard (IFRS 13) and by the main international asset valuation guidelines (EVCA).…”

Section: Introductionmentioning

confidence: 99%

The Marketability Discount in Spanish Valuation Multiples: Investors’ Perception in Listed Companies Versus Private Transactions

Rodríguez–López

Martín

2019

Journal of Business Economics and Management

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The aim of this paper is to assess the fair marketability discount (MD) in the Spanish market for valuation multiples comparing public versus private transactions. The study finds that to obtain MD it is necessary previously to control by a battery of factors that affects ratios’ prices such as industry, firm size, profitability, risk, year and also other characteristics about the buyer. The interactions of MD with each variable showed different investors’ perceptions about non marketability enterprises explaining MD. The valuation methodology applied in the research was a cross section of 824 public and private acquisitions in the Spanish market from the period 2006−2017. This work represents important evidence, in a more integrated vision than previous literature, for analysts and regulators stressing the necessity to apply MD in Spanish valuation processes based in listed multiples.

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Section: Introductionmentioning

confidence: 99%

The Marketability Discount in Spanish Valuation Multiples: Investors’ Perception in Listed Companies Versus Private Transactions

Rodríguez–López

Martín

2019

Journal of Business Economics and Management

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The market value of SMEs: a comparative study between private and listed firms in alternative stock markets

2023

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This study aims to compare the market value of private firms and publicly listed small and medium-sized firms (SMEs) in alternative stock markets through a private discount approach with estimates of value based on discounted cash flow projections and along with a comparable multiples approach. The valuation methodology applied in this study yielded a final sample that included 232 observations between public and private companies in the Spanish market. To calculate the discount, we apply the different approaches of discounted cash flow and multiples, such as valuation, earnings, book value, and revenue. Our results conclude there is no private discount, instead, the outcomes of this article suggest a premium over public firms for some ratios. The negative private company discounts mean a premium and, on the other hand, some multiples suggest a discount according to the method of valuation. This paper proves private discounts resulted does not have any comparable value within the same country although all firms in Spain use the same currency. We value the discounted cash flows of our forecasts using a discount rate based on the Capital Asset Pricing Model (CAPM), so our study can also be viewed as a test sensitivity of CAPM-based approaches to equity risk premium, terminal value, and growth rate. Furthermore, we compare historical transaction multiples of privately held companies with transaction multiples of similar publicly held firms.

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Acquisition discount and valuation effect of private M&As in China

Cited by 2 publications

References 25 publications

The Marketability Discount in Spanish Valuation Multiples: Investors’ Perception in Listed Companies Versus Private Transactions

The Marketability Discount in Spanish Valuation Multiples: Investors’ Perception in Listed Companies Versus Private Transactions

The market value of SMEs: a comparative study between private and listed firms in alternative stock markets

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