Publication | BRG Review 1:1

The Value of Control

Kevin Kreitzman

Winter 2011

Control Premiums, Minority Interest Discounts, and the Fair Market Value Standard

Kevin Kreitzman contributed to the first edition of BRG Review.

Control premiums applied in non-negotiated transactions of private securities represent the value that can be extracted from minority interests by controlling shareholders. The common practice of using observed acquisition premiums to justify excessive control premiums (or minority interest discounts) is misguided and not supported by the empirical evidence. This practice causes significant damage to the welfare of the general public and the millions of employees who rely on the integrity of these valuations. Small control premiums do persist despite laws to protect minority shareholders, even though such premiums should be eliminated if directors comply with their fiduciary responsibilities.

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Kevin Kreitzman


San Francisco Bay Area