Valuation of entrepreneurial businesses

Brösel, Gerrit; Matschke, Manfred Jürgen; Olbrich, Michael

doi:10.1504/ijev.2012.048595

Cited by 19 publications

(12 citation statements)

References 26 publications

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“…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.…”

Section: Discussionmentioning

confidence: 99%

“…The valuation depends on the target function (maximising either wealth or income), as well as the decision field (opportunities for action) of a specific valuation subject (Hering, Olbrich & Steinrücke 2006;Olbrich, Brösel & Hasslinger 2009;Matschke, Brösel & Matschke 2010;Brösel, Matschke & Olbrich 2012;Brösel, Toll & Zimmermann 2012;Lerm, Rollberg & Kurz 2012;Hering, Toll & Kirilova 2015, Olbrich, Quill & Rapp 2015Rapp 2015). In accordance with our research objective, we assume that the valuation subject pursues the target income maximisation.…”

Section: The Methodology and Modelmentioning

confidence: 99%

“…Therefore, the quantification of the periodic shadow prices (so-called endogenous marginal interest rates) cannot be detached from the objective function and the underlying decision field of the specific valuation subject (Hering, Olbrich & Steinrücke 2006;Olbrich, Brösel & Hasslinger 2009;Matschke, Brösel & Matschke 2010;Brösel, Matschke & Olbrich 2012;Lerm, Rollberg & Kurz 2012;Hering, Toll & Kirilova 2015;Olbrich, Quill & Rapp 2015;Rapp 2015, pp. 89-90).…”

Section: The Methodology and Modelmentioning

confidence: 99%

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Application of Alternative Valuation Formulas for a Company Sale

Hering

Toll²

2015

GEFJ

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In this paper, a company owner (valuation subject) is interested in selling a company (valuation object). The potential seller must conduct a business valuation to determine what minimum price he must demand without the transaction proving disadvantageous. The purpose of our paper is to show how alternative valuation formulas solve this valuation problem under realistic imperfect market conditions. As a main conclusion, the business value can usually not be calculated using the future earnings method.

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Section: Discussionmentioning

confidence: 99%

Section: The Methodology and Modelmentioning

confidence: 99%

Section: The Methodology and Modelmentioning

confidence: 99%

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Application of Alternative Valuation Formulas for a Company Sale

Hering

Toll²

2015

GEFJ

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“…Knightian uncertainty is the key prerequisite for the emergence of profits (Barney 1986;von Mises 1949) and, hence, acutely central to the study and understanding of the phenomenon of entrepreneurship as profits are the reward for good entrepreneurial judgment (Knight 1921). This holds true for both start-up and well-established firms albeit the uncertainty they face might differ in degree (e.g., Brösel et al 2012).…”

Section: Introductionmentioning

confidence: 99%

On entrepreneurial decision logics under conditions of uncertainty: an attempt to advance the current debate

Rapp

Olbrich

2020

J Innov Entrep

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Uncertainty plays a crucial role for most entrepreneurship theories and is thus at the core of entrepreneurship research. Despite decades of research efforts, the notion of uncertainty is still somewhat vague and elusive, however. Consequently, desirable improvement of our understanding of uncertainty requires further considerations. Fortunately, in a recent paper published in the Academy of Management Review, Packard and Clark (Academy of Management Review, 2019) contribute their ideas on the subject. The study in question offers a novel dichotomy of uncertainty types and normatively prescribes entrepreneurial strategies associated with those different settings. The remarks of Packard and Clark have attracted opposition, however, and while appreciating the study’s efforts to refine the uncertainty construct, the present paper aims to advance the current debate. One stance adopted in the current paper to do so is to suggest supplementing research on uncertainty itself with the notion of ill-structuredness affecting decision problems. That approach makes it possible to theorize about entrepreneurial decision-making in a broader yet more nuanced way.

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“…In the framework of M&A's, acquisitions or sales of whole companies or distinct business units are in the center of considerations. For this purpose, to value companies or business units, a reliable and valid valuation procedure is required (Matschke et al 2010;Brösel et al 2012;Matschke and Brösel 2013). Broadly speaking, in valuation B Christian Toll Christian.toll@fernuni-hagen.de 1 Department of Investment Theory and Business Valuation, Faculty of Business Administration and Economics, Fernuniversität Hagen, Postfach 940, 58084 Hagen, Germany theory, it is distinguished between market-oriented and investment-oriented valuation procedures.…”

Section: Introductionmentioning

confidence: 99%

Company valuation and the nonlinear state marginal price vector model under agency conflicts

Kintzel

Toll

2021

Cent Eur J Oper Res

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In the present contribution, the innovative nonlinear state marginal price vector model introduced in Toll and Kintzel (CEJOR 27(4):1079–1105, 2019) (plus Errata herein) is enriched to include budgeting problems under agency conflicts. Under asymmetric information, a company owner as principal can only rely on information transmitted to her from her managers as agents. In the related modeling, it is assumed that slack and capital rationing are optimal. The governing budgeting relations are integrated into a nonlinear framework furnished by a multi-period newsvendor approach and are solved numerically by means of a two-step valuation procedure based on two successive nonlinear convex optimizations. The capital market is assumed to be imperfect. As case study, the M&A-valuation case of a merger of two IT-service companies is considered subjected to optimal combined dimensioning of capacities and budgets under stochastic demand. On balance, by addressing agency conflicts within the well-established nonlinear framework, the practical application field of the valuation procedure is widened.

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Valuation of entrepreneurial businesses

Cited by 19 publications

References 26 publications

Application of Alternative Valuation Formulas for a Company Sale

Application of Alternative Valuation Formulas for a Company Sale

On entrepreneurial decision logics under conditions of uncertainty: an attempt to advance the current debate

Company valuation and the nonlinear state marginal price vector model under agency conflicts

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