You are the CEO of a private company and want to buy it. There is one major shareholder who owns 70 percent of the firm. The remaining 30 percent is held by oceanic shareholders. Based on a DCF model, you estimate the base value of the firm to be $100 million. This excludes any liquidity discount and/or control premium. Based on your observations of the market, liquidity discounts are about 30 percent and control premiums are about 15 percent for similar deals. Your firm has 80 million shares outstanding.
What would you offer to pay in total and per share to the controlling shareholder? To the oceanic shareholders? What if it were not a private company but a public company. Show how would that change your calculation and answers?
Be sure to caluclate the DLOM/liquidity factor first then the value of the control/minority. Please make an excel chart.