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The appropriate evaluation procedure is a procedure to evaluate assets and corporate value fairly and reasonably.
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- M&A
- TOB
- MBO
- Stock Exchange
- Parent-child business
- Inheritance evaluation
などで使われます。
Corporate value is not determined by the stock price.
We comprehensively judge future profits, assets, abilities, growth, risks, market comparisons, etc.
In this article,
- Definition of Appropriate Evaluation Procedure
- Why is it necessary?
- Typical Evaluation Method
- Points to be considered to investors
to beginners.
What is the appropriate evaluation procedure?
Appropriate Evaluation Procedure
Process to check that price is reasonable
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For example, if a company is acquired, it will be a problem even if the acquisition price is too low.
If the buyer is too high, it is possible to damage after the acquisition.
If the seller is too cheap, the existing shareholders will be利益.
to evaluate corporate value as fair as possible.
- FinancialAnalysis
- Estimate future profit
- Comparison with similar companies
- 資産 property value
- Third-party evaluation
- Stock Value Statement
is done.
Why important?
If the appropriate evaluation procedure is important,
To prevent unfair transactions
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In particular, M&A and TOB conflicts interest on the purchase side.
For example, MBO will be a buyer, so if you look at it from an existing shareholder, it will result in a conflict of interest that it will be bought as cheap as possible.
Even if a parent company becomes a wholly owned subsidiary, the interest of a parent company and a few shareholders is confronted.
In this situation,
“Affordable for minority shareholders?”
Very important.
In the "Guide on the Positive M&A Practice" by the Ministry of Economy, Trade and Industry, the importance of fair procedures is整理 from the viewpoint of improving corporate value and securing shareholders' interests.
Points confirmed by appropriate evaluation
When evaluating corporate value, check from multiple perspectives.
| 項目 | 内容 |
|---|---|
| Profitability | Replenish profit and cash flow |
| Growth | Will future sales and profit increase? |
| Financial Safety | Are there any problems with borrowings or recurring funds? |
| Asset Value | Real estate, current deposit, investment securities, etc. |
| Market Comparison | Is it expensive or cheaper than other companies |
| Risks | Scenic, Foreign Exchange, Interest Rate, Regulation, Competitive Environment |
There is no absolute answer to corporate value evaluation.
That’s why we use multiple evaluation methods to check the price validity.
Typical Evaluation Method
1. DCF Method
The DCF method is to calculate corporate value by decreasing future cash flow to present value.
The expression image is as follows:
DCF = CF1/(1+r) + CF2/(1+r)^2 + ... + CFn/(1+r)^nHome
- CF = future cash flow
- r = discount rate
- = years
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to say
How to convert money to worth now
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The characteristics of the DCF method are easy to measure the growth of the company.
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- Sales Growth
- Profit
- Investment
- Discount rate
- Persistent Growth Rate
The result changes greatly depending on the premise.
Therefore, it is important to see not only calculation results but also prerequisites when viewing DCF.
2. Similar Companies Comparison Law
The similar company comparison method is a method to calculate the stock price indicator of the same company.
The most commonly used indicators are:
- PER
- PBR
- EV/EBITDA
Yes.
The PER expression is as follows:
PER = stock price ÷ 1 share profitThe benefits of comparing similar companies are easy to understand.
It is an easy-to-understand way for investors to find companies that are actually trading on the market.
On the other hand, if the whole market is overheated, the comparison target may be too expensive.
In addition, even if the same business is seen, simple comparison is not possible if the growth rate, profit rate, financial structure, and business structure are different.
3. Net Asset Law
Net assets law is a way to think about corporate value based on company assets and debts.
In particular
- Real Estate Company
- Company Profile
- A company that focuses on liquidation value
- Company with a lot of assets
Useful
to say
How to see the value ofをabilities from the assets that the company has
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However, it may not be possible to fully reflect future growth only by Net Asset Law.
Therefore, it is often used in combination with DCF and market comparison methods to see profitability.
Materials used for evaluation procedures
In proper evaluation, the following materials are used:
| 資料 | Function |
|---|---|
| Financial Results | Review past performance and financial status |
| Business Plan | Estimate future sales and profits |
| Stock Value Statement | A third party indicates the rating range |
| Fairness Opinion | Opinions on the usefulness of trading conditions |
| Board of Directors | Make decisions |
| Special Committee | Important in transactions with conflict of interest |
In M&A, you can see not only the price but also the prosperity of the procedure.
If the decision-making process is opaque even if it looks at a high price, you may be asked by investors.
Why investor is important
Understanding the appropriate evaluation process will change the way investment news is viewed.
For example, when TOB is announced, investors will be able to:
- What is the TOB price?
- Is PER and PBR reasonable compared to other companies
- Is DCF premise conservative or optimistic?
- Is it unfavorable to minority shareholders?
- Is there a third-party calculator or special committee?
- What reasons did the Board of Directors approve?
to see
Value rather than price
It is easy to judge.
How beginners can easily misunderstand
Not a stock price ICOL corporate value
Stock price is the price traded on the market.
However, the market price動き in short-term、s, supply and demand, news, interest rates and exchanges.
Therefore, the stock price and the actual value of the company may be disappointed.
In the appropriate evaluation procedure, we look at the corporate value in a multifaceted manner while considering this レre.
DCF is not an accurate answer
The DCF method looks theoretically, but the result changes greatly depending on the prerequisite.
For example, you can increase your corporate value by simply increasing your growth rate.
Even if you change the discount rate slightly, the evaluation amount will change greatly.
Therefore, investors are not only the result of the DCF,
“What are the premises calculated?”
You need to see.
If there is a arithmetic statement, it is not always possible
The Company shall not be responsible for the calculation of the share value of a third party.
Important
- Who evaluated
- Is there a conflict of interest?
- Business plan is reasonable
- Are you using multiple evaluation methods?
- Is the profit of minority shareholders protected?
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It is necessary to see the contents as well as the format of the procedure.
- “A process to confirm the price is reasonable”
- M&A, TOB, MBO, Stock Exchange
- DCF Law, Similar Companies Comparison Law, Net Asset Law
- There is no only correct answer to corporate value evaluation
- Investors should see the price as well as prerequisites and prosperity
In investment
The viewpoint of thinking about value rather than price
is important in the long term.
Understanding the appropriate evaluation process makes it easier to determine M&A news and TOB prices.