Electronic Resource
Berkeley, Calif.
:
Berkeley Electronic Press (now: De Gruyter)
Journal of business valuation and economic loss analysis
2.2008, 2, art5
ISSN:
1932-9156
Source:
Berkeley Electronic Press Academic Journals
Topics:
Economics
Notes:
With the FASB's emphasis on fair value, valuation of privately held companies' capital structures has taken on additional emphasis. Each methodology proposed in the AICPA's Practice Aid "Valuation of Privately-Held-Company Equity Securities Issued as Compensation" can result in suboptimal valuations when valuing complex capital structures. We discuss valuation of such capital structures and offer a workable, integrated simulation methodology combining the strengths of the probability-weighted expected return method with those of the option-pricing method. We demonstrate the methodology using transformed real-world data resulting in a flexible methodology that can be expanded to accommodate various aspects of complex capital structures.
Type of Medium:
Electronic Resource
URL:
http://www.bepress.com/jbvela/vol2/iss2/art5
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