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KEY POINTS

• Premiums applied to control holdings.
• Reasons for increase in takeover activity.
• Companies are often overpriced.
• Should the value of the control premium be lower?

It has long been axiomatic in fiscal valuation circles that the market prices of most listed company shares are determined by a large number of very small trades taking place on a daily basis.

It is no great intellectual leap of faith to state that the market prices and market capitalisations of listed companies are therefore minority valuations.

Logic leads to the concept that a premium should be applied when considering control holdings. So when using guideline listed companies for the valuation of control holdings in private companies one of the adjustments to make is an uplift of 30% to the metrics derived from the...