Corporate Entity Valuation

Corporate entity valuation will be necessary when there is a takeover bid, when the company wishes to go public, when there is a scheme of merger, when shares are sold, when the group's parent company is negotiating the sale of the subsidiary to a management buyout team or to an external buyer.

Whatever the reason, valuation presents some special considerations. It is unlikely that one valuation method or model would be used in isolation. Models and methods of valuing shares:

a) Asset-Based Models
* Net Assets basis
* Net Realisable Value Basis
* Net Replacement Cost Basis

b) Income-Based Models
* Price / earnings (P/E ratio) method
* Earnings Yield Method
* Accounting Rate of Return

c) Cash Flow-Based Models
* Dividend valuation model and dividend growth model
* Discounted Cash Flow Basis