Method for calculating stock prices of unlisted companies and flow of implementation is important, in this article, from the basic knowledge of stock price calculation to the points to note at the time of the request, it is explained so that even those who do not have prior knowledge can easily understand. If you are considering a request for stock price calculation, first understand stock price calculation.
“What is stock price calculation?”
I want to know how to request stock price calculation. Many people may have such troubles, don’t they?
Stock price calculation is required when issuing m&a and stock options, but if you do not have knowledge of “stock price calculation”, you may violate the company’s act and tax law.
(1) What is stock price calculation?
Stock price calculation is the calculation of the shareholder value of a company.If it is a listed company, the stock price is calculated at the market price at that time because the stock is bought and sold in the securities market, but the unlisted company has not been bought or sold shares, so a clear stock price is not determined.
However, even undisclosed companies or unlisted company share price is calculated when issuing m&a and stock options, and it is stock price calculation at that time.
There are various methods of the stock price calculation, and it is common to ask a professional third party because it is necessary to select a method according to the situation and calculate the stock price. Failure to calculate stock prices at appropriate prices may cause problems under the tax and companies act. For example, if you make a transfer at a significantly lower price when doing unlisted shares trading, it may be substantially recognized as a gift and maybe taxed by tax law.
Situations where stock price calculation is required
There are many cases where stock price calculation is necessary, but this time, we will explain the four general situations:-
- M＆a
- Publish stock options
- Financing from venture capital
- Purchase of shares from minority shareholders
M&a
The first case where stock price calculation is required is m&a.In the event of m&a, stock price calculation is required as one of the factors for determining price negotiations between the seller’s company and the buyer’s company. Specifically, the seller’s company determines the offer price, and the buyer side makes investment decisions.For both parties to reach a firm agreement, it is necessary to ask a third party to calculate stock prices to maintain fairness and transparency.
Calculation method
The calculation methods often used in stock price calculations are similar company ratio method, similar transaction ratio quasi-method, dcf method, etc., but first, we will explain three general stock price calculations.
Issuance of stock options
The second situation where stock price calculation is required is when the stock option is issued. If you set the exercise value low, you can increase the capital gains you get after listing and incentivize option holders.
However, it is impossible to freely set stock options prices due to various constraints, so consultation with experts is essential.
Calculation method
There are three types of calculation methods that are often used when calculating stock options stock prices. When calculating stock options, they are calculated in the same manner as those used for the above-mentioned m&a.
