Allocating Business Value to Multiple Classes of Equity

About the Course:

Perhaps you believe you know what your company is worth. But do you know what the stake of the common shareholders is worth? How about the value of the preferred shareholders? What about the value of redeemable convertible preferred stock? How are these values affected by liquidation preferences? By various dividend rights?

Through case studies, this session demonstrates--in unparalleled detail--the application of the Options Pricing Model (OPM) to allocate business value to multiple classes of equity. This course discusses OPM inputs such as option pricing inputs and capital structure inputs. The following are among the issues reviewed:

  • What measures can be taken to limit overvaluation of preferred shares and undervaluation of common shares?
  • How do you value options to participate in a company's future growth?
  • How does phantom stock affect valuation of equity classes?
  • How is volatility calculated when the comparables are public companies and the subject company is private?
  • Is it better to calculate volatility based on vacillation of earnings or stock prices?
  • What is the role of dividends when calculating call values?
  • How do you 'gross up' incoming cash from the exercise of outstanding options?
  • How does a company's capital structure affect volatility?
  • How do you determine the risk-free rate?
  • How do you determine the value of an option inside an option (e.g. when the company is pursuing speculative research and that company is most appropriately valued as an option)?

Bonus: Selected Excel models.

Course Leader: David Anderson, Director, EisnerAmper, LLP

David Anderson has prepared hundreds of qualified valuation reports for financial reporting, tax reporting, M&A and litigation support purposes, and has testified as an expert witness. At EisnerAmper, LLP, he also has responsibility for the review of external specialist valuations in the context of audit engagements.

He holds the MBA degree from the Simon Graduate School of Business Administration at the University of Rochester, and the PhD from Princeton University. He taught Finance 101 at the University of Rochester in 1996 - 1997, and has worked full time as a professional business appraiser since that time.

Course Length: Approx. 2.0 hours

$345.00 PER USER

Purchase Now:

Need help purchasing this course? Please contact Neomi Barazani at 609-919-1895 ext. 100 or at