Offer value what is it? In the past, no one has proposed this idea, but a lot of people in the application, but they will sell the value used in the wrong on the buy. Assessed to the company’s future cash flows, discount rates value, in fact, even at a substantial discount to buy, and still there is no margin of safety. because of the intangible assets of the enterprise in the majority of cases, very unstable, unable to provide investors with a true margin of safety.
But offer value for selling a good reference. Following example:
Respectively Firm A and B, the total share capital of 100 million shares of the enterprise,
A company’s annual net profit of $ 5 million, an annual growth rate of 30% in the next 20 years, the price per share of U.S. $ 5 million, City win was 100 times.
B corporate annual net profit was $ 30 billion, 5% in the next 20 years, the annual growth rate of 5%, the price per share of $ 3,000, the market win rate of 10 times
So 20 years later, the enterprise’s net profit A $ 950 million, to 8.24 percent as the discount rate, the next 20 years, after a reasonable enterprise value ceiling of $ 11.5 billion, now valued at $ 2.306 billion, the enterprise value per share $ 23.06
20 years later, B Enterprises net profit of $ 79.5 billion, to 8.24 percent as the discount rate, the enterprises of the next 20 years after the reasonable price ceiling of $ 954 billion, the present value of $ 195.8 billion, the enterprise value per share $ 1958.
When investors sell operations in A Company of the 100 times City win rate, sold obviously not rational. Room for improvement because there is a great value.
B enterprises reached before 10 times City win rate, investors should take to sell the operation.
The black spider Fund website there are more corporate valuation article