Question #1

f the board members also own substantial equity in the company. Factor 3: Due to the significant ownership of equity by the board of Bakan, management may be tempted to take a shorter-term view than that typically taken by public firms. Constable always prefers to see a basic analysis of price multiples for companies before any valuation. Choo produces this where possible, but usually follows it with a valuation of the private company-using price multiples based on recent sales of comparable assets. He calls this the "Choo Comparison Method (CCM)." The CCM valuation is then adjusted by Constable and Choo to take account of Constable's individual financing costs and any perceived synergies with his existing assets. Choo refers to this final valuation after adjustments in his reports as the "Intrinsic Value." Constable has recently taken him to task on this and suggested that as the valuation focuses on the value to him as a specific investor it should be called the "Investment Value."