FVC2354. Primer on Valuing Non-Controlling interest (Minority Interest)

Minority interest, also referred to as non-controlling interests, is the share of equity ownership in a entity is less than 50%. Many valuation engagements in involve the valuation of fractional interest in litigation and non-litigation matters. This session will focus on issues encountered when valuing a Minority interest in a business. Topics covered will be:

1. Type of Entity being Valued.
2. Purpose and Use of Valuation Report
3. Cash Flow Steams -Control vs. Adjusted
4. Forensic Analysis of Income Statement and Balance Sheet
5. Normalization Adjustments
6. Capitalization Rate – Build-Up Method and Weighted Average Cost of Capital
7. Specific Company Risk analysis
8. Tax Affect? What do we do These Days
9. Supporting Valuation Discounts – Discount for Lack of Control (DLOC)
10. Discount for Lack of Marketability – (DLOM)

Learning Objectives:

• Identify the different types of entity structures and their valuation nuances under the 3 valuation approaches – Asset, Income & Market
• Recognize the unique concepts encountered when valuing a Minority Interest from Cash-Flow Streams, Normalization Adjustments and Forensic Adjustments.
• Identify understands the variables used to identify risk in valuation of minority interests.
• Distinguish the purpose and process used to compute and support Minority Discounts.