Archive for December, 2013

Is your capitalization rate negative?

If you are valuing a business by using capitalization of income methods you may have to be extra careful in selecting the right capitalization rate. The cap rate is just the difference between the discount rate, which captures the company’s risk profile, and the earnings growth rate over the long term. Sounds simple enough, but… Continue Reading

Valuing a minority ownership of a private company

If you look at the public capital markets such as NYSE or NASDAQ, the day-to-day prices are for non-controlling business ownership interests, usually a small number of shares. In other words, these per share prices represent the minority price. If you want to acquire a controlling share of the company’s stock, you will have to… Continue Reading