In our most recent issue of Portfolio Valuation: Private Equity and Venture Capital Marks and Trends, we provide a brief digest and commentary of some of the most relevant market trends influencing the fair value of private equity and venture capital portfolio investments.
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A weekly update on financial reporting topics curated by Mercer Capital’s Financial Reporting Valuation professionals.
From our perspective, contractual (and/or customary) rights and preferences allocated among the various parties to a transaction define the parameters within which we operate while measuring fair value. That being said, the extent to which differential shareholder rights can or cannot be (legally or normatively) enforced may inform the assumptions and expectations of market participants, be they VC investors or startup employees. And those market participant perspectives will inform the valuation analysts’ assumptions and methods.
Much has been written about Amazon’s $13.4 billion acquisition of Whole Foods Market that was announced on Friday, June 16. There are all sorts of theories about Amazon’s strategy and the brilliance (or folly) of combining the powerhouse online retailer with a traditional retail grocery chain. But for purposes of this post, we’re going to take a step back and look at the impact of the two externally-driven events on the stock prices of other players in the industry.
What effect does the loss of a key leader have on the value of an enterprise? Valuation specialists often consider whether a business is subject to a key-person dependency when measuring fair value. For early-stage enterprises, key-person dependencies tend to be obvious and significant as many start-ups simply would not survive the loss of the founder. For a company of the scale and complexity of Uber, the analysis becomes a matter of degree. To what extent would the loss of Mr. Kalanick’s services affect the expected cash flows (including growth) and risk perceived by investors?
The stock market rallied in the first five months of the year, with the Dow Jones and S&P 500 reaching record highs and continuing to climb. Nevertheless, IPOs remain scarce compared to prior years.
- Bankruptcy and Restructuring Advisory
- Equity-Based Compensation Valuation
- Fair Value
- Impairment Testing
- Portfolio Valuation
- Purchase Price Allocation