In this episode of the Forensic Perspectives podcast, host Mark S. Gottlieb discusses the three types of risk often considered in a business valuation analysis: Business Risk, Financial Risk, and Liquidity Risk.
Episode Highlights:
Mark mentions why the $4 billion acquisition of Marvel enterprises by The Walt Disney Company was one of the major business stories in 2009. (00:55)
Mark explains how the income approach and business valuation are computed. (2:12)
Mark mentions the factors that should be considered, such as risk. (3:10)
Mark shares the three risk disciplines and their analysis. (3:31)
Mark mentions the most subjective portion of the capitalization rate computation. (5:33)
Mark mentions one of the most common mistakes they see in the analysis. (6:28)
Key Quotes:
“In a publicly held business, an investor’s interest is liquidated after the execution of a sell order, this investment is generally converted into cash within a couple of days, and liquidity and interest are non-existent.” – Mark S. Gottlieb
“The valuators ability to articulate the pros and cons of the subject company’s industry. The advantages and disadvantages of the subject company’s business and the analysis of the subject companies financial components becomes an integral part of the valuation report.” – Mark S. Gottlieb
“Be cautious when you’re reviewing a valuation analysis to ensure that the risk interpretation is also not contained in other components of the valuation model.” – Mark S. Gottlieb
