November 22, 2017

Resources

Below are links to reports and articles published by Greene Valuation founder Martin Greene on various business valuation topics. For more information on these topics and how Greene Valuation can use this expertise to serve your needs, contact us.

“Black-Scholes Model Can Overvalue ESOs and Other Options” Martin Greene, authorBusiness Valuation Update, November 2015. Download this article.

“Are Minority Interest Discounts Really Appropriate in Valuing Noncontrolling Interests in Holding Real Estate Companies?” Martin Greene, author, CPA Journal, March 2014 Download this article

“Tanenblatt v. Commissioner: Valuation Methods in Real Estate,” Martin Greene, author, Tax StringerSM A Publication of the New York State Society of Certified Public Accountants, January 2014 Download this article.

“Adjusting Restricted Stock Transactions to Estimate Marketability Discounts.” Martin Greene, co-author, Business Valuation Update, September 2012. Download this article.

 

 

Do Longstaff and other put option models produce a marketability premium or a discount? (published in Business Valuation Update):

Maximum strike price lookback (Longstaff) and other put option models are achieving greater acceptance as liquidity components in estimating discounts for lack of marketability. These models provide greater empirical support, which satisfies the need for greater precisions and replicability when estimating discounts. Download this article.

Systemic methodology calculates size premiums for smaller private companies based on public company data (published in Business Valuation Update):

The size premium (sp) can be one of the most significant components in estimating the cost of capital under the build-up model (BUM) or capital asset pricing model (CAPM) for smaller privately-held companies, yet frequently business valuators may apply the least quantitative measures to estimate its value. This article outlines a methodology to estimate the sp for smaller companies by extrapolating market returns and betas of larger publicly-traded companies; it also clarifies how to apply the estimated sp to the company’s cash flow under the BUM and CAPM. Download the article.

Oppressed shareholders’ rights can affect estate and gift tax valuations (published in The CPA Journal, co-authored by Douglas Schnapp, Esq., CPA):

Minority shareholders are provided statutory rights frequently overlooked in estate and gift tax valuations. Although designed to protect minority shareholders from oppressive controlling shareholders, these rights should be carefully considered during business valuations in other settings, such as estate and gift taxation. The potential for the legal exercise of special minority shareholder rights could affect the discounts assigned to the minority interest. Download this article.

Sample business valuation for a noncontrolling, nonmarketable interest in a real estate family limited partnership (FLP):

Many business appraisers apply the cost approach to discount studies, disregarding basic valuation principles and applying discounts for lack of control and marketability to net asset values. Greene Valuation applies the income approach, using the present value of cash flows, as well as the market approach, which uses ratios of noncontrolling public interests to develop noncontrolling, marketable values. We’ve prepared a sample business valuation of a ten percent (10%) noncontrolling, nonmarketable interest in a sample real estate family limited partnership, L.P. Contact us for the free sample.