Quantitative and qualitative analysis of valuation methods used by valuators and independent experts within the context of public offers – 100 transactions

mai 2005

Evaluation punctuates the main stages in the life of a firm (takeover offers, asset valuations, impairment tests, restructurations, public offers, acquisitions, disposals, mergers…). Many evaluation techniques and models allow to manage the diversity and the complexity of the situations. However, because of the volatility of the markets and the bursting of the speculative internet bubble, it is now justified to wonder about the relevance of the valuation methods used. Thereby, it is essential to understand the foundations, the scope and the limits of these methods.

The survey carried out by CONSTANTIN ASSOCIES tries to answer these questions by analysing the methods used by valuators and independent experts within the context of takeover offers. The selected transactions are extracted from the AMF (Autorité des Marchés Financiers, French equivalent of the SEC) internet site which lists the performed transactions. This survey has been completed on the basis of a sample of 100 transactions (delisting offers and take-over bids), relative to the period 2001-2004, on which valuators and independent experts have been called upon.

This survey is structured on three parts :

• firstly, a quantitative study, which indicates that only a few methods are really used by valuators and experts,
• he comparative analysis between the methods employed in 1996 and those employed between 2001 and 2004, and the analysis of the AMF jurisprudence, which allows to understand the evolutions observed concerning the choice of methods employed and retained as references,
• lastly, the qualitative analysis of the correlation between the values accepted by valuators and experts and the offered prices, which shows the supremacy of some methods, called « main methods».