The Value of Corporate Control and the Comparable Company Method of Valuation

9 Pages Posted: 7 Jan 2005

See all articles by John D. Finnerty

John D. Finnerty

Finnerty Economic Consulting LLC; Fordham University - Finance Area

Douglas R. Emery

University of Miami - Department of Finance

Abstract

The comparable company method of valuation does not account for the value of corporate control. Therefore, the method must be adjusted if it is being used to value a company involved in a change-of-control transaction. We provide two alternative ways to adjust the comparable company method for the value of corporate control. The efficacy of the adjusted comparable company method is confirmed on 51 highly leveraged transactions (HLTs) from Kaplan and Ruback (1995).

Suggested Citation

Finnerty, John D. and Emery, Douglas R., The Value of Corporate Control and the Comparable Company Method of Valuation. Financial Management, Vol. 33, No. 1, Spring 2004. Available at SSRN: https://ssrn.com/abstract=520268

John D. Finnerty

Finnerty Economic Consulting LLC ( email )

60 East 42nd Street
Suite 2910
New York, NY 10165
United States
2125991640 (Phone)
2125991242 (Fax)

HOME PAGE: http://www.finnecon.com

Fordham University - Finance Area ( email )

113 West 60th Street
New York, NY 10023
United States
2125991640 (Phone)
2125991242 (Fax)

HOME PAGE: http://www.finnecon.com

Douglas R. Emery (Contact Author)

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States
305-284-4362 (Phone)

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