Commercial economic damages: loss of business value

• Author: Stanley P. Stephenson/David A. Macpherson
• Pages: 339-364

COMM. ECON. DAMAGES:

LOSS OF BUSINESS VALUE

17-1

CHAPTER 17

COMMERCIAL ECONOMIC DAMAGES:

LOSS OF BUSINESS VALUE

§1700 OVERVIEW

§1710 INFORMATION NEEDS

§1711 Def‌ining the Assignment

§1712 Data Needs

§1713 Financial Statement Analysis

§1720 THREE APPROACHES TO BUSINESS VALUATION

§1721 Asset-Based Approach

§1722 Income-Approach

§1723 Market Approach

§1730 INCOME METHODS: CCG AND DCF

§1731 Normalizing the Data

§1731.1 Control vs. Lack-of-Control Adjustments

§1731.2 Accounting, Extraordinary, Nonrecurring and Unusual Item Adjustments

§1731.3 Non-Operating Assets and Liability and Related Income and Expense Adjustments

§1731.4 Taxes

§1731.5 Synergies for Mergers and Acquisitions, if Applicable

§1732 Def‌ining the Benef‌it Stream

§1732.1 Cash Flows to Equity

§1732.2 Cash Flows to Invested Capital

§1733 Income Method: When to Use Discounted Cash Flow vs. the Capitalization Method

§1734 Income Method: Details:

§1734.1 Control or Minority Value

§1734.2 Interest Bearing Debt

§1734.3 Length of Discrete Period

§1734.4 Terminal Value Considerations

§1734.5 Growth Rate

§1734.6 When Benef‌its Are Received

§1740 COST OF CAPITAL

§1741 Proper Choice of Discount Rate

§1742 Characteristics of The Cost of Capital

§1743 Methods for Measuring the Cost of Equity Capital.

§1743.1 Build Up Method (BUM)

COMM. ECON. DAMAGES:

LOSS OF BUSINESS VALUE

Determining Economic Damages 17-2

§1743.2 Capital Asset Pricing Model (CAPM)

§1743.3 Modif‌ied Capital Asset Pricing Model (MCAPM)

§1744 Method for Measuring the Market Value of Invested Capital

§1750 DISCOUNTS AND PREMIUMS

§1751 Types of Premiums and Discounts

§1751.1 Control Premiums

§1751.2 Discount for Lack of Marketability (DLOM)

§1752 Taking More Than One Discount into Consideration

§1760 APPENDICES

§1761 Appendix A: Lost Prof‌its vs. Lost Business Value

§1762 App endix B : An Example of Cash Flows Determining Net Cash Flows to Equity and to Invested Capital

§1763 Appendix C: Common Errors

§1764 Appendix D: BV Standards

§1765 Appendix E: The Role of Time in the Measurement of Economic Damages