{"product_id":"business-valuation-isbn-9781119583097","title":"Business Valuation","description":"\u003cp\u003e\u003cb\u003eA guide that demystifies modern valuation theory and shows how to apply fundamental valuation concepts\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe revised and updated third edition of \u003ci\u003eBusiness Valuation: An Integrated Theory\u003c\/i\u003e explores the core concepts of the integrated theory of business valuation and adapts the theory to reflect how the market for private business actually works.\u003c\/p\u003e \u003cp\u003eIn this third edition of their book, the authors—two experts on the topic of business valuation—help readers translate valuation theory into everyday valuation practice. This important updated book:\u003c\/p\u003e \u003cul\u003e \u003cli\u003eIncludes an extended review of the core concepts of the integrated theory of business valuation and applies the theory on a total capital basis\u003c\/li\u003e \u003cli\u003eExplains “typical” valuation discounts (marketability and minority interest) and premiums (control premiums) in the context of financial theory, institutional reality and the behavior of market participants\u003c\/li\u003e \u003cli\u003eExplores evolving valuation perspectives in the context of the integrated theory\u003c\/li\u003e \u003cli\u003eWritten by two experts on valuation theory from Mercer Capital\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003eThe third edition of \u003ci\u003eBusiness Valuation\u003c\/i\u003e is the only book available regarding an integrated theory of business valuation—offering an essential, unprecedented resource for business professionals.\u003c\/p\u003e \u003cp\u003eIntroduction xiii\u003c\/p\u003e \u003cp\u003eWhat’s New in the Third Edition? xiv\u003c\/p\u003e \u003cp\u003eWho Should Read This Book? xvii\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart One Conceptual Overview of the Integrated Theory\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 The World of Value 3\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 3\u003c\/p\u003e \u003cp\u003eCommon Questions 3\u003c\/p\u003e \u003cp\u003eThe World of Value 4\u003c\/p\u003e \u003cp\u003eThe Organizing Principles 5\u003c\/p\u003e \u003cp\u003eSummary 16\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 The Integrated Theory (Equity Basis) 19\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 19\u003c\/p\u003e \u003cp\u003eCommon Questions 20\u003c\/p\u003e \u003cp\u003eThe Fundamental Valuation Model 21\u003c\/p\u003e \u003cp\u003eThe Conceptual Levels of Value 23\u003c\/p\u003e \u003cp\u003eSymbolic Notation for the Integrated Theory 27\u003c\/p\u003e \u003cp\u003eThe Marketable Minority Interest Level of Value 29\u003c\/p\u003e \u003cp\u003eIntroduction to the Control Levels of Value 35\u003c\/p\u003e \u003cp\u003eStrategic Control Level of Value 51\u003c\/p\u003e \u003cp\u003eFirmwide Levels versus the Shareholder Level of Value 58\u003c\/p\u003e \u003cp\u003eThe Nonmarketable Minority Level of Value 60\u003c\/p\u003e \u003cp\u003eThe Integrated Theory of Business Valuation on an Equity Basis 67\u003c\/p\u003e \u003cp\u003eSummary 67\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 The Integrated Theory (Enterprise Basis) 71\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 71\u003c\/p\u003e \u003cp\u003eComparing the Levels of Value: Equity and Enterprise Bases 73\u003c\/p\u003e \u003cp\u003eFinal Comparisons of the Equity and Enterprise Bases 77\u003c\/p\u003e \u003cp\u003eSummary 79\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Two Valuing Enterprise Cash Flows\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 Income Approach (Cash Flows) 83\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 83\u003c\/p\u003e \u003cp\u003eReconciling Single-Period Capitalization and Discounted Cash Flow Methods 84\u003c\/p\u003e \u003cp\u003eDefining Enterprise Cash Flows 90\u003c\/p\u003e \u003cp\u003eDefining Equity Cash Flows 95\u003c\/p\u003e \u003cp\u003eReinvestment Rates and Interim Growth Rates 99\u003c\/p\u003e \u003cp\u003eTerminal Growth Rates 104\u003c\/p\u003e \u003cp\u003eExpected Cash Flows and the Integrated Theory 108\u003c\/p\u003e \u003cp\u003eMarketable Minority Interest Level: Public Company Equivalent 115\u003c\/p\u003e \u003cp\u003eFinancial Control Level: Private Equity Cash Flows 124\u003c\/p\u003e \u003cp\u003eStrategic Control Level: Strategic Acquirer Cash Flows 128\u003c\/p\u003e \u003cp\u003eAssessing the Reasonableness of Projected\u003c\/p\u003e \u003cp\u003eEnterprise Cash Flows 136\u003c\/p\u003e \u003cp\u003eConclusion 139\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Income Approach (Discount Rate) 141\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 141\u003c\/p\u003e \u003cp\u003eReturn Basics: Realized versus Required Returns 142\u003c\/p\u003e \u003cp\u003eComponents of the Weighted Average Cost of Capital 148\u003c\/p\u003e \u003cp\u003eMarket Participants and the WACC 165\u003c\/p\u003e \u003cp\u003eThe Levels of Value and the WACC 169\u003c\/p\u003e \u003cp\u003eAssessing Overall Reasonableness 175\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 Market Approach (Guideline Public Companies) 177\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 177\u003c\/p\u003e \u003cp\u003eRelationship of the Income and Market Approaches 178\u003c\/p\u003e \u003cp\u003eWhat Do Observed Public Company Valuation Multiples Mean? 180\u003c\/p\u003e \u003cp\u003eAdjusting Valuation Multiples for Differences in Risk and Growth 199\u003c\/p\u003e \u003cp\u003eGuideline Public Company Multiples and the Enterprise Levels of Value 214\u003c\/p\u003e \u003cp\u003eAssessing Overall Reasonableness 219\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Market Approach (Guideline Transactions) 221\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 221\u003c\/p\u003e \u003cp\u003eAttributes of Guideline Transaction Data 222\u003c\/p\u003e \u003cp\u003eDrawing Valuation Inferences from Guideline Transaction Data 225\u003c\/p\u003e \u003cp\u003eMinority Interest Discounts Inferred from Observed Control Premiums 240\u003c\/p\u003e \u003cp\u003eGuideline Transaction Multiples and the Levels of Value 242\u003c\/p\u003e \u003cp\u003eAssessing Overall Reasonableness 244\u003c\/p\u003e \u003cp\u003eAppendix 7-A: A Historical Perspective on the Control Premium and Minority Interest Discount 247\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Three Valuing Shareholder Cash Flows\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eChapter 8 Restricted Stock Discounts and Pre-IPO Studies 271\u003c\/p\u003e \u003cp\u003eIntroduction 271\u003c\/p\u003e \u003cp\u003eAn Overview of Restricted Stock Discounts 275\u003c\/p\u003e \u003cp\u003eReview of the FMV\/Stout Restricted Stock Database 306\u003c\/p\u003e \u003cp\u003ePre-IPO Discounts 317\u003c\/p\u003e \u003cp\u003eConclusion 325\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Introduction to the QMDM (Quantitative Marketability Discount Model) 327\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 327\u003c\/p\u003e \u003cp\u003ePotential Valuation Approaches at the Shareholder Level 328\u003c\/p\u003e \u003cp\u003eA Shareholder Level Discounted Cash Flow Model in Outline 331\u003c\/p\u003e \u003cp\u003eEconomic Factors Giving Rise to the Marketability Discount 338\u003c\/p\u003e \u003cp\u003eConclusion 346\u003c\/p\u003e \u003cp\u003eAppendix 9-A: Liquidity and Marketability 349\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 The QMDM Assumptions in Detail 359\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 359\u003c\/p\u003e \u003cp\u003eAssumption 1: Expected Holding Period for the Investment (\u003ci\u003eHP\u003c\/i\u003e) 360\u003c\/p\u003e \u003cp\u003eAssumption 2A: Expected Dividend Yield (D %) 368\u003c\/p\u003e \u003cp\u003eAssumption 2B: Expected Growth of Dividends (\u003ci\u003eGD\u003c\/i\u003e) 377\u003c\/p\u003e \u003cp\u003eAssumption 2C: Timing of Dividend Receipt 378\u003c\/p\u003e \u003cp\u003eAssumption 3A: The Expected Growth Rate in Value (\u003ci\u003eGV\u003c\/i\u003e) 379\u003c\/p\u003e \u003cp\u003eAssumption 3B: Adjustments to the Terminal Value 385\u003c\/p\u003e \u003cp\u003eAssumption 4: Required Holding Period Return (\u003ci\u003eRhp\u003c\/i\u003e) 385\u003c\/p\u003e \u003cp\u003eConclusion 399\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Applying the QMDM 401\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 401\u003c\/p\u003e \u003cp\u003eComprehensive Example of the QMDM in Use 401\u003c\/p\u003e \u003cp\u003eCondensed QMDM Examples 414\u003c\/p\u003e \u003cp\u003eThe Uniform Standards of Professional Appraisal Practice and the QMDM 427\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 Applying the Integrated Theory to Tax Pass-Through Entities 435\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eIntroduction 435\u003c\/p\u003e \u003cp\u003eThe Nature of the S Corporation Benefit 437\u003c\/p\u003e \u003cp\u003eThe Firmwide Level Value of S Corporations 440\u003c\/p\u003e \u003cp\u003eOther Observations Regarding Relative Value at the Firmwide Levels 443\u003c\/p\u003e \u003cp\u003eThe Shareholder Level Value of S Corporations 446\u003c\/p\u003e \u003cp\u003eS Corporations and the Tax Cuts and Jobs Act of 2017 458\u003c\/p\u003e \u003cp\u003eConclusion 467\u003c\/p\u003e \u003cp\u003eAbout the Authors 469\u003c\/p\u003e \u003cp\u003eIndex 477\u003c\/p\u003e \u003cp\u003e\u003cb\u003eZ. Christopher Mercer, ASA, CFA, (Memphis, TN)\u003c\/b\u003e is the founder and chief executive officer of Mercer Capital. He has prepared, overseen, or contributed to hundreds of valuations for purposes related to tax, ESOPs, buy-sell agreements, and litigation, among others. He has extensive experience in litigation engagements including statutory fair value cases, divorce, and numerous other matters where valuation issues are in question. He is also an expert in buy-sell agreement disputes. Mercer is a prolific author on valuation-related topics and a frequent speaker on business valuation issues for national professional associations and other business and professional groups.\u003c\/p\u003e \u003cp\u003e\u003cb\u003eTRAVIS W. HARMS, CFA, CPA\/ABV,\u003c\/b\u003e is the leader of Mercer Capital's Family Business Advisory Services Group. He focuses primarily on providing financial, strategic, and valuation consulting to multi-generational family businesses. Mr. Harms regularly speaks and writes on valuation and related topics for family business owners and their advisors.\u003c\/p\u003e  \u003cp\u003e\u003ci\u003eBusiness Valuation: An Integrated Theory\u003c\/i\u003e comprehensively and thoroughly describes the various approaches and methods valuation analysts use to measure the value of businesses and business ownership interests. \u003c\/p\u003e\u003cp\u003eWritten in three parts, \u003ci\u003eBusiness Valuation\u003c\/i\u003e first describes the organizing principles of business valuation. The authors discuss the financial, economic, logical, and psychological principles that provide the basis for effective business valuation. The first part develops an Integrated Theory of Business Valuation that allows valuation analysts to account for all the cash flows of a business, whether in the aggregate or in the portions attributable to specific ownership interests. The focus is on expected cash flows and their growth and the risks associated with achieving those cash flows. \u003c\/p\u003e\u003cp\u003eIn the second part, the authors apply the theory to practice, describing each of the methods valuation analysts might use to derive indications of value for the business as a whole. Like the first part, the discussion is rooted in the carefully defined concepts of expected cash flow, risk, and growth. This part examines calculating enterprise cash flows for use in the income approach, assigning and quantifying risk to calculate discount rates, using the guideline public company method under the market approach, and dealing with the challenges of using guideline transaction data. \u003c\/p\u003e\u003cp\u003eFinally, \u003ci\u003eBusiness Valuation\u003c\/i\u003e closes with a section on the intersection of the Integrated Theory and the value of illiquid minority ownership interests in private companies at the nonmarketable minority level of value. In this section, the authors also provide a thoughtful and critical analysis of several traditional techniques for developing marketability discounts. Expected cash flow, risk, and growth remain the foundations. The Quantitative Marketability Discount Model (QMDM), as part of the Integrated Theory, is discussed at length and the book includes a detailed examination of its assumptions and applications. The twelfth and final chapter contains a discussion of the application of the Integrated Theory to tax pass-through entities. \u003c\/p\u003e\u003cp\u003ePerfect for anyone with even a passing interest in business valuation or consulting, \u003ci\u003eBusiness Valuation: An Integrated Theory\u003c\/i\u003e belongs on the bookshelves of all valuation analysts, attorneys, accountants, and market participants who serve or interact with private and public companies. The book is also ideal for college and graduate level courses related to business valuation.   \u003c\/p\u003e\u003cp\u003e\u003cb\u003e Praise for Business Valuation\u003c\/b\u003e \u003c\/p\u003e\u003cp\u003e\"Mercer and Harms' \u003ci\u003eBusiness Valuation: An Integrated Theory, Third Edition\u003c\/i\u003e provides valuation professionals, attorneys, other users of valuations, and students of valuation a resource for better understanding how the pieces of the valuation puzzle fit together. This book is written in an easy to follow style and is worthy of being added to your valuation library.\"\u003cbr\u003e \u003cb\u003e —Roger J. Grabowski,\u003c\/b\u003e \u003cb\u003eFASA,\u003c\/b\u003e Managing Director, Duff \u0026amp; Phelps \u003c\/p\u003e\u003cp\u003e\"It has been 13 years since the second edition of this book came out. It was certainly worth the wait. All the core chapters have been updated with easy-to-understand explanations of valuation concepts. Mercer and Harms have also added new chapters on the Income Approach (Cash Flows), the Income Approach (Discount Rate), the Market Approach (Guideline Public Companies), the Market Approach (Guideline Transactions), and Restricted Stock Discounts and Pre-IPO studies. This well-written book presents a thoughtful approach to business valuation. The bottom line is that this is a valuable resource that tackles controversial topics head on.\"\u003cbr\u003e \u003cb\u003e —James R. Hitchner,\u003c\/b\u003e \u003cb\u003eCPA\/ABV\/CFF, ASA,\u003c\/b\u003e Managing Director, Financial Valuation Advisors \u003c\/p\u003e\u003cp\u003e\u003cb\u003eMaster the approaches and methods of business valuation with this comprehensive resource from two industry leaders\u003c\/b\u003e \u003c\/p\u003e\u003cp\u003eIn this book, distinguished authors and valuation analysts Z. Christopher Mercer and Travis W. Harms of Mercer Capital dive deeply into the intricacies of business valuation, providing readers with an Integrated Theory that acts as a practical and powerful tool to value businesses and business ownership interests. Using expected cash flow, growth, and risk as the foundations of the Integrated Theory, the authors discuss the major, organizing principles of business valuation, as well as the various methods used to value businesses and business ownership interests. \u003c\/p\u003e\u003cp\u003eThey provide a detailed discussion of the Quantitative Marketability Discount Model, which applies the Integrated Theory to the valuation of illiquid minority ownership interests in private companies. \u003c\/p\u003e\u003cp\u003eThe book is not just theoretical, but practical, eschewing unnecessary mathematical detail in favor of concrete examples and strategic advice designed to help valuation analysts put the Integrated Theory into practice. It contains actionable advice on how to deal with commonly encountered valuation dilemmas, like valuing tax pass-through entities and ownership interests in them.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47988874281189,"sku":"NP9781119583097","price":115.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781119583097.jpg?v=1761781869","url":"https:\/\/k12savings.com\/products\/business-valuation-isbn-9781119583097","provider":"K12savings","version":"1.0","type":"link"}