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CALCULATION OF CONTROL VALUE AND TURKISH FINANCIAL MARKETS

Year 2015, Volume: 1 Issue: 1, 40 - 63, 01.12.2015
https://doi.org/10.17261/pressacademia.2016118138

Abstract

The question of Control Share Premium, more widely referred to as the “control premium” in the literature on corporate valuations is treated as a curious area of study by the academic and professional circles. This paper addresses the question of CSP primarily from a conceptual point of view. We point out, here, that, 1) corporate value drivers, summarized a “private benefits of control,” that currently are evident and internal to the acquired businesses are the main determinant of the value of the CSP; 2) CSP is indeed relevant in Turkish financial markets; and, 3) The most meaningful approach to calculate control premiums in Turkish financial markets, as in other regions, would be to employ DCF methodology on the “set of private benefits” that are identified in the target company to be acquired based on its on corporate and sectoral merits. Another conclusion is that as CPS has a certain impact on the valuation of overall equity value of a firm, it has a significant impact on the position of minority shareholders with respect to the minority protection rights in the target company

References

  • Primary Sources American Society of Appraisers, ASA Business Valuation Standards, BVS-VII;available at http://www.appraisers.org/docs/default- source/discipline_bv/bv-standards.pdf?sfvrsn=0 Banking Regulatory and Supervision Authority, Financial Markets Report, No. 26, June 2012.
  • Borsa Istanbul, Annual Report 2014.
  • Turkish Statistical Institute Data Base Books Berle, Adolf A. Means, Gardiner C. (1991), The Modern Corporation and Private Property, USA: Transaction Publishers, New Jersey.
  • Cornell, Bradford (1992), Corporate Valuation, Business One Irwin, USA: New York.
  • Gilson, Ronald, J. and Bernard, S. Black (1995), The Law and Finance of Corporate Acquisitions, 2nd ed., Foundation Press, New York.
  • Mercer, Christopher, Travis, Harms W. (2007), Business Valuation: An Integrated Theory, 2nd ed., USA: Wiley, New York
  • Prattt, Shannon (2008), Valuing a Business, 5th edition, USA: McGraw Hill, New York Articles
  • Booth, Richard A. (2001), “Minority Discounts and Control Premiums in Appraisal Proceedings.” October 4, 2001; available at: http://ssrn.com/abstract=285649
  • Coates, J.C.,Ownership, takeovers and EU law: how contestable should EU corporations be?; The Harvard John M. Olin Discussion Paper Series: http://www.law.harvard.edu/programs/olin_center/, Discussion Paper No. 450, 12/2003, ISSN 1045-6333
  • Cornell, Bradford (2013), Guideline Public Company Valuation and Control Premiums: An Economic Analysis; available at: http://people.hss.caltech.edu/~bcornell/PUBLICATIONS/2013%20Cornell%20-%20Control%20Premiums.pdf
  • Damodaran, Ashwath (2005), “The Value of Control: Implications for Control Premiums, Minority Discounts and Voting Share
  • Differentials;” available at: http://people.stern.nyu.edu/adamodar/pdfiles/papers/controlvalue.pdf Dick, Alexander, Zingales, Luigi (2002), “Private Benefits of Control: An International Comparison; available at https://ideas.repec.org/p/nbr/nberwo/8711
  • Ernest and Young-İstanbul, Mergers and Acquisitions Report Turkey, 2014.
  • Fishman, Jay E. (2013), “The Measurement and Application of Market Participant Acquisition Premiums,” Appraisal Foundation Working
  • Group-3 Discussion Draft, April 16, 2013.
  • Harms, Travis W. (2015), “The Market Participant Acquisition Premium,” 2015 OIV International Business Valuation Conference, Milan,
  • Italy, January 19, 2015:available at http://www.forumtools.biz/oiv/upload/TravisHarmsOIVPresentation.pdf
  • Hekimoğlu, Mert Hakan, Tanyeri, Başak (2011), “Stock Market Reactions to Mergers of Non-financial Turkish Firms;” available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1768015
  • Matthews, Gilbert (2008) “Misuse of control premiums in Delaware appraisals,”Business Valuation Review,27.
  • “Market Participant Acquisition Premiums,” VCR Alert, November 2013.
  • Nath, Eric (1990), “Control premiums and minority interest discounts in private companies,”Business Valuation Review, 9.
  • Nath, Eric (1994), “A Tale of Two Markets,”Business Valuation Review, 13.
  • Nath, Eric W. (2011), “Best Practices Regarding Control Premiums; Comments regarding the Appraisal Foundation’s White Paper on
  • Control Premiums,” Journal of Business Valuation 2011:2.
  • Sepe, S.M. (2010), “Private Sale of Corporate Control: Why the European Mandatory Bid Rule is Inefficient,”Arizona Legal Studies
  • Discussion Paper No. 10-29. Available at SSRN: http://ssrn.com/abstract=1086321
  • Pursel, Brad (2010), “Control Premiums; Application and Analysis”Business Valuation Publications LLC, article # 11126, March 2010.
  • Schubert, Walt, Barenbaum, Les (1991) “Control Premiums and the Value of the Closely-held Firm,” Journal of Small Business Finance, Vol. :2; available at: http//digitalcommons.pepperdine.edu/jef/vol1/iss2/5
Year 2015, Volume: 1 Issue: 1, 40 - 63, 01.12.2015
https://doi.org/10.17261/pressacademia.2016118138

Abstract

References

  • Primary Sources American Society of Appraisers, ASA Business Valuation Standards, BVS-VII;available at http://www.appraisers.org/docs/default- source/discipline_bv/bv-standards.pdf?sfvrsn=0 Banking Regulatory and Supervision Authority, Financial Markets Report, No. 26, June 2012.
  • Borsa Istanbul, Annual Report 2014.
  • Turkish Statistical Institute Data Base Books Berle, Adolf A. Means, Gardiner C. (1991), The Modern Corporation and Private Property, USA: Transaction Publishers, New Jersey.
  • Cornell, Bradford (1992), Corporate Valuation, Business One Irwin, USA: New York.
  • Gilson, Ronald, J. and Bernard, S. Black (1995), The Law and Finance of Corporate Acquisitions, 2nd ed., Foundation Press, New York.
  • Mercer, Christopher, Travis, Harms W. (2007), Business Valuation: An Integrated Theory, 2nd ed., USA: Wiley, New York
  • Prattt, Shannon (2008), Valuing a Business, 5th edition, USA: McGraw Hill, New York Articles
  • Booth, Richard A. (2001), “Minority Discounts and Control Premiums in Appraisal Proceedings.” October 4, 2001; available at: http://ssrn.com/abstract=285649
  • Coates, J.C.,Ownership, takeovers and EU law: how contestable should EU corporations be?; The Harvard John M. Olin Discussion Paper Series: http://www.law.harvard.edu/programs/olin_center/, Discussion Paper No. 450, 12/2003, ISSN 1045-6333
  • Cornell, Bradford (2013), Guideline Public Company Valuation and Control Premiums: An Economic Analysis; available at: http://people.hss.caltech.edu/~bcornell/PUBLICATIONS/2013%20Cornell%20-%20Control%20Premiums.pdf
  • Damodaran, Ashwath (2005), “The Value of Control: Implications for Control Premiums, Minority Discounts and Voting Share
  • Differentials;” available at: http://people.stern.nyu.edu/adamodar/pdfiles/papers/controlvalue.pdf Dick, Alexander, Zingales, Luigi (2002), “Private Benefits of Control: An International Comparison; available at https://ideas.repec.org/p/nbr/nberwo/8711
  • Ernest and Young-İstanbul, Mergers and Acquisitions Report Turkey, 2014.
  • Fishman, Jay E. (2013), “The Measurement and Application of Market Participant Acquisition Premiums,” Appraisal Foundation Working
  • Group-3 Discussion Draft, April 16, 2013.
  • Harms, Travis W. (2015), “The Market Participant Acquisition Premium,” 2015 OIV International Business Valuation Conference, Milan,
  • Italy, January 19, 2015:available at http://www.forumtools.biz/oiv/upload/TravisHarmsOIVPresentation.pdf
  • Hekimoğlu, Mert Hakan, Tanyeri, Başak (2011), “Stock Market Reactions to Mergers of Non-financial Turkish Firms;” available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1768015
  • Matthews, Gilbert (2008) “Misuse of control premiums in Delaware appraisals,”Business Valuation Review,27.
  • “Market Participant Acquisition Premiums,” VCR Alert, November 2013.
  • Nath, Eric (1990), “Control premiums and minority interest discounts in private companies,”Business Valuation Review, 9.
  • Nath, Eric (1994), “A Tale of Two Markets,”Business Valuation Review, 13.
  • Nath, Eric W. (2011), “Best Practices Regarding Control Premiums; Comments regarding the Appraisal Foundation’s White Paper on
  • Control Premiums,” Journal of Business Valuation 2011:2.
  • Sepe, S.M. (2010), “Private Sale of Corporate Control: Why the European Mandatory Bid Rule is Inefficient,”Arizona Legal Studies
  • Discussion Paper No. 10-29. Available at SSRN: http://ssrn.com/abstract=1086321
  • Pursel, Brad (2010), “Control Premiums; Application and Analysis”Business Valuation Publications LLC, article # 11126, March 2010.
  • Schubert, Walt, Barenbaum, Les (1991) “Control Premiums and the Value of the Closely-held Firm,” Journal of Small Business Finance, Vol. :2; available at: http//digitalcommons.pepperdine.edu/jef/vol1/iss2/5
There are 28 citations in total.

Details

Other ID JA65ZB98DG
Journal Section Articles
Authors

S. Saygin Eyupgiller This is me

Nebil Ilseven This is me

Publication Date December 1, 2015
Published in Issue Year 2015 Volume: 1 Issue: 1

Cite

APA Eyupgiller, S. S., & Ilseven, N. (2015). CALCULATION OF CONTROL VALUE AND TURKISH FINANCIAL MARKETS. PressAcademia Procedia, 1(1), 40-63. https://doi.org/10.17261/pressacademia.2016118138
AMA Eyupgiller SS, Ilseven N. CALCULATION OF CONTROL VALUE AND TURKISH FINANCIAL MARKETS. PAP. December 2015;1(1):40-63. doi:10.17261/pressacademia.2016118138
Chicago Eyupgiller, S. Saygin, and Nebil Ilseven. “CALCULATION OF CONTROL VALUE AND TURKISH FINANCIAL MARKETS”. PressAcademia Procedia 1, no. 1 (December 2015): 40-63. https://doi.org/10.17261/pressacademia.2016118138.
EndNote Eyupgiller SS, Ilseven N (December 1, 2015) CALCULATION OF CONTROL VALUE AND TURKISH FINANCIAL MARKETS. PressAcademia Procedia 1 1 40–63.
IEEE S. S. Eyupgiller and N. Ilseven, “CALCULATION OF CONTROL VALUE AND TURKISH FINANCIAL MARKETS”, PAP, vol. 1, no. 1, pp. 40–63, 2015, doi: 10.17261/pressacademia.2016118138.
ISNAD Eyupgiller, S. Saygin - Ilseven, Nebil. “CALCULATION OF CONTROL VALUE AND TURKISH FINANCIAL MARKETS”. PressAcademia Procedia 1/1 (December 2015), 40-63. https://doi.org/10.17261/pressacademia.2016118138.
JAMA Eyupgiller SS, Ilseven N. CALCULATION OF CONTROL VALUE AND TURKISH FINANCIAL MARKETS. PAP. 2015;1:40–63.
MLA Eyupgiller, S. Saygin and Nebil Ilseven. “CALCULATION OF CONTROL VALUE AND TURKISH FINANCIAL MARKETS”. PressAcademia Procedia, vol. 1, no. 1, 2015, pp. 40-63, doi:10.17261/pressacademia.2016118138.
Vancouver Eyupgiller SS, Ilseven N. CALCULATION OF CONTROL VALUE AND TURKISH FINANCIAL MARKETS. PAP. 2015;1(1):40-63.

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