Valuation of Family Businesses: A case study

The vast majority of all Swedish companies are family businesses. Research within the field of family businesses has not until recent years been developed. Moreover, the research regarding valuation of family businesses is close to non-existing. Family businesses differ in many ways from non-family businesses, for example when it comes to culture, ownership and management. Hence, there is a possibility that family businesses are valuated differently from non-family businesses.

The purpose with this thesis is to describe how valuation of family businesses is done from the perspective of an acquiring company.


1 Introduction
1.1 Background
1.2 Problem
1.3 Purpose
1.4 Delimitation
1.5 Disposition of the Thesis
2 Frame of Reference
2.1 Introduction
2.2 Definition of family business
2.3 Family business vs. non-family business
2.3.1 Strengths
2.3.2 Weaknesses
2.4 Valuation of family businesses
2.5 Valuation methods
2.5.1 The net worth model
2.5.2 Discounted Cash Flow (DCF)
2.5.3 NUTDEL
2.5.4 Valuation determined on an earnings basis with persistent profit
2.5.5 Goodwill
2.6 Multiples
2.6.1 Trading multiples
2.6.2 Transaction multiples
3 Method
3.1 Introduction
3.2 Pre-understanding
3.3 Choice of method
3.3.1 Qualitative vs. Quantitative study
3.3.2 Hermeneutic approach
3.3.3 Inductive vs. Deductive approach
3.3.4 Case study approach
3.3.5 Interview
3.4 Method for analysis
3.5 Reliability and validity
4 Results
4.1 Company X – introduction
4.1.1 Intangibles that affect the value
4.1.2 Financial facts that affect the value
4.1.3 Determining the final value
4.2 Valuation of Family Business 1
4.3 Valuation of Family Business 2
4.4 Valuation of Family Business 3
5 Analysis
5.1 Intangibles that affect the value
5.2 Financial facts that affect the value
5.3 Analysis of Family Business 1
5.4 Analysis of Family Business 2
5.5 Analysis of Family Business 3
5.6 Comparison of the three cases
6 Conclusion
7 Discussion
7.1 Evaluation and Critique of the Study
7.2 Final Remarks
7.3 Suggestions for Further Studies

Author: Claesson, Johan,Wengbrand, Frida,Eriksson, Sofia

Source: Jönköping University

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