| Purpose:
To provide management with objective valuation information
on which they can rely when making stock-related decisions.
There are many circumstances that require strategic valuation:
- Strategic planning
- Acquisitions or divestitures
- Corporate recapitalizations
- Vertical integration
- Capital formation
- Buy/Sell agreements
- Management buyouts
The value of a company to a strategic buyer is based on more
than book value, historical operating results or an appraisal
of fixed assets. Whereas financial buyers are primarily concerned
with the return on investment that can be generated on a stand-alone
basis, strategic buyers assess the returns that are expected
from a business combination. In general, the magnitude of
the premium above the value of the company to a financial
buyer represents the negotiating range between the strategic
buyer and seller.
|
