Quantitative Business
Valuation
A Mathematical Approach for
Today's Professionals
Every once in a while, a
researcher appears who is so innovative and whose work is of such a groundbreaking nature
that he deserves every bit of notice he receives. Leading valuation and litigation
economist Jay B. Abrams is just such a researcher, and his book Quantitative Business
Valuation the first all-inclusive guide to quantitative measurement in the valuation of
privately held businesses is equally deserving of notice.
A rigorous and eye-opening
treatment filled with applications for a wide variety of scenarios in the valuation of
privately held businesses, Quantitative Business Valuation emphasizes regression analysis
of real-world transactions:
stock market returns,
restricted stock discounts, and fractional interest discounts from net asset value in the
secondary limited partnership market.
The book is organized in five
segments. The first three follow the chronology of a valuation: forecasting cash flows,
discounting to present value, and adjusting for control and marketability. In the fourth,
Abrams assembles the pieces of the puzzle to present a unique and unified approach to
valuation one that can be empirically tested and applied to firms of virtually any size
along with a discussion of measuring valuation error. He concludes by covering special
topics: valuation of startups, measuring the dilution in value that occurs in sales to
Employee Stock Ownership Plans (ESOPs), and analysis of company buyouts of partners and
shareholders (which draws upon results from ESOP valuations).
The resulting work, solidly
grounded in economic theory and including all necessary mathematics, integrates existing
science into the valuation profession and develops valuation formulas and models that
professional practitioners will find useful on a daily basis. A representative but far
from exhaustive listing of other business valuation topics covered would include:
Mathematical derivation of
cash flow
Application of regression
analysis
Theoretical and empirical
superiority of arithmetic mean
Adjusting for levels of
control and marketability
Empirical tests of Abrams'
valuation theories
Valuing startups
Measuring and apportioning
dilution in ESOPs
Quantitative Business
Valuation is the definitive guide to quantitative measurements in the valuation process.
No other book written on business valuation is as well researched, innovative, and
bottom-line beneficial to practitioners. It is destined to become a standard business
valuation reference for decades to come.
ABOUT THE AUTHOR
Jay B. Abrams, ASA, CPA,
MBA, is one of today's leading valuation and litigation economists. The principal in
Abrams Valuation Group, he is credited with numerous inventions including the Abrams Log
Size Model for calculating discount rates, the Economic Components Model for calculating
the discount for lack of marketability, the Abrams Table of Accounting Transposition
Errors, Periodic Perpetuity Factors, Annuity Discount Formulas for cash flows with
constant growth and stub year, and formulas for valuing leveraged ESOPs with calculating
dilution. In addition, Abrams is a popular finance lecturer and the author of numerous
influential journal articles.
489 pages