Selling a Company: Assessing the Minimum Demandable Price

Application of Alternative Valuation Formulas for a Company Sale

“…These simplifications must be embedded in a conclusive theory. The English-language scientific literature only provides a few papers addressing the marginal price calculus (Hering, Olbrich & Steinrücke 2006;Olbrich, Brösel & Hasslinger 2009;Matschke, Brösel & Matschke 2010;Brösel, Matschke & Olbrich 2012;Hering, Toll & Kirilova 2014a, 2014b, 2014c, 2015. However, none of these papers discuss valuation formulas to determine the minimum demandable price in the case of a company sale.…”

“…46-49). The English-language scientific literature only provides a few case studies addressing calculation of the marginal price for a company sale (Hering, Toll & Kirilova 2014a, 2014c, but none of these papers discuss valuation formulas. To create knowledge, our unique example shows how valuation formulas derived from the state marginal price model can compute the minimum demandable price for a company sale.…”

Earn-outs to bridge gap between negotiation parties – curse or blessing?

“…Furthermore, he loses a certain degree of flexibility since he must first assess the conformity of upcoming decisions with contractual agreements and has to coordinate them with the seller. If the buyer is concurrently managing the company, he has to take care that the contractual agreements will not restrict his entrepreneurial freedom to act too much; in particular, as far as the realization of possible synergy effects is concerned (Behringer, 2004 [22][23][24][25] since it is almost impossible to consider all contingencies, and it is foreseeable that arguments concerning the proper interpretation of the agreements could arise ex-post. The related potential costs are initiation and contractual costs as well as the costs for safeguards (e.g., for the adaptation of the contract to changed conditions) and enforcement (e.g., for legal fees).…”