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Valuation of entrepreneurial businesses

Author

Listed:
  • Gerrit Brösel
  • Manfred J. Matschke
  • Michael Olbrich

Abstract

"A small business is not a little big business" (Welsh and White, 1981) - this also holds true for valuing small businesses. Such companies act in utmost imperfect markets, are generally unique and the forecast of their future profit is rather difficult. These characteristics impede the use of DCF and real option methods, as well as of multiples. Therefore, this paper presents the functional valuation theory as an alternative approach to valuation. Its partial and general models allow a better adaption to the characteristics of entrepreneurial businesses, especially when these models are combined with a Monte Carlo simulation.

Suggested Citation

  • Gerrit Brösel & Manfred J. Matschke & Michael Olbrich, 2012. "Valuation of entrepreneurial businesses," International Journal of Entrepreneurial Venturing, Inderscience Enterprises Ltd, vol. 4(3), pages 239-256.
    • Handle: RePEc:ids:ijeven:v:4:y:2012:i:3:p:239-256
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    Citations

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    Cited by:

    1. Li Zhanbiao, 2021. "A Study of Chinese A-Share Listed Companies: Effect of Corporate Valuation on the Investment Level," International Journal of Science and Business, IJSAB International, vol. 5(7), pages 70-93.
    2. Olaf Kintzel & Christian Toll, 2022. "Company valuation and the nonlinear state marginal price vector model under agency conflicts," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(4), pages 1279-1305, December.
    3. Michael Olbrich & David J. Rapp & Florian Follert, 2022. "Eugen Schmalenbach, Austrian economics, and German business economics," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 35(2), pages 205-233, June.
    4. Michael Olbrich & David J. Rapp & Florian Follert, 2022. "Eugen Schmalenbach, Austrian economics, and German business economics," Post-Print hal-02891111, HAL.
    5. David J. Rapp & Michael Olbrich, 2020. "On entrepreneurial decision logics under conditions of uncertainty: an attempt to advance the current debate," Journal of Innovation and Entrepreneurship, Springer, vol. 9(1), pages 1-9, December.
    6. Christian Toll & Thomas Hering, 2017. "Valuation of Company Merger from the Shareholders’ Point of View," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(46), pages 836-836, August.

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