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A nonlinear state marginal price vector model for the task of business valuation. A case study: The dimensioning of IT-service companies under nonlinear synergy effects

Author

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  • Christian Toll

    (Fernuniversität Hagen)

  • Olaf Kintzel

    (Fernuniversität Hagen)

Abstract

In the present contribution we present a nonlinear extension of the innovative linear investment-oriented company valuation method and so-called state marginal price vector model of Toll which represents a two-step procedure separated into a base and a valuation approach. As novel aspect we address nonlinear synergy effects in M&A’s. For this purpose we introduce a nonlinear framework within a semi-discrete convex optimization approach. As capital market assumption we simulate an imperfect market. To demonstrate the usefulness of the method, we address a case study of a merger of two IT-service companies. The related valuation and dimensioning of capacities is done by solving a multi-period newsvendor model under stochastic demand. The demonstrated nonlinear framework is shown to be suitable for a wide range of business valuation tasks.

Suggested Citation

  • Christian Toll & Olaf Kintzel, 2019. "A nonlinear state marginal price vector model for the task of business valuation. A case study: The dimensioning of IT-service companies under nonlinear synergy effects," 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. 27(4), pages 1079-1105, December.
    • Handle: RePEc:spr:cejnor:v:27:y:2019:i:4:d:10.1007_s10100-018-0535-x
    DOI: 10.1007/s10100-018-0535-x
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    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.

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