A widely followed corner of the blog is our “Valuation Basics” series, where in earlier posts we have described many of the components of the discounted cash flow analysis, the income-based valuation methodology preferred by Delaware’s Court of Chancery. (See here, here, and here). Earlier this month we examined a market-based valuation approach — the comparable companies analysis — that derives the subject company’s value based on the share price of analogous publicly traded companies. Working knowledge of these and other valuation methodologies is essential for both appraisal professionals and professional investors, since as the Court of Chancery recently described in Merlin Partners LP v. AutoInfo, Inc., enterprise value can and will be determined in an appraisal proceeding a variety of ways, “depending on the case.” Readers of our “Valuation Basics” series should check back in for the next post in that series, which will examine another market-based approach to valuation, the precedent transactions analysis.
