- This topic has 5 replies, 3 voices, and was last updated 2 days ago by
John Moffat.
John Moffat.-
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dennissherpa101
- Topics: 43
- Replies: 56
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Sir is is DVM valuation method used by minority share holding where as income based and cash flow based valuation method used by majority shareholding?
John Moffat
- Topics: 57
- Replies: 49946
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There is no rule, but what you have written is more likely to be the case.
dennissherpa101
- Topics: 43
- Replies: 56
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Sir this is one of the point mentioned in the kaplan book but I just can’t seem to figure out why.
John Moffat
- Topics: 57
- Replies: 49946
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It is because minority shareholders have no control over what the company does or how much dividend the company pays. All they get from the company is whatever dividend the company decides to pay.
dennissherpa101
- Topics: 43
- Replies: 56
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majority share holder have control over the dividend so they could get wrong valuation. and sir what does control have to do with choosing dividend or earnings for valuation?
John Moffat
- Topics: 57
- Replies: 49946
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The majority shareholders control what the company does. So for example they could put the company up for sale and then an asset valuation would be sensible.
Minority shareholders have to accept whatever dividend the company pays and therefore it is the level of dividends that will determine the amount they will be prepared to pay for the shares.
Have you actually watched my free lectures on this?
dennissherpa101
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