How to Value a Private Company? -Case of Miele Korea-

How to Value a Private Company? -Case of Miele Korea-
Cho, Seong-Ho
acquisition for international growth; valuation of private companies; valuation methods; Miele Korea
Issue Date
Series/Report no.
KDI Working Paper Series;08-06
In acquisitions of private companies, the valuation of a private target is the financial analytical skills that general managers may want to learn and understand more than any other. Rather than rely entirely on financial specialists, managers would like to know how to do it themselves for two reasons. First, understanding valuation is critical for successful acquisition by not overpaying beyond synergy potential. Second, it has become a prerequisite for meaningful participation in a company's resource-allocation decisions. This paper introduces assets-, market-, and cash flow- based valuation methods for a non-listed company and applies them to the case of Miele Korea. Miele & Cie, KG, a global home appliances manufacturer headquartered in German, has intended in 2005 to enter into the Korean market by acquiring a subsidiary of Ssangyong Corporation, Komie Ltd., an exclusive distributor of Miele products in Korea. The general manager of Miele wants to know what the maximum price is they can pay for the successful deal-making of the privately owned company.
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