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

Finnerty, John D.; Emery, Douglas R.

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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

Fordham University - Finance Area; Finnerty Economic Consulting LLC

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: Suggested Citation

Finnerty, John D. and Finnerty, John D. and Emery, Douglas R., The Value of Corporate Control and the Comparable Company Method of Valuation. Available at SSRN: https://ssrn.com/abstract=520268