The Value of Control: Implications for Control Premia, Minority Discounts and Voting Share Differentials

  title={The Value of Control: Implications for Control Premia, Minority Discounts and Voting Share Differentials},
  author={Aswath Damodaran},
  journal={New York University Stern School of Business Research Paper Series},
  • A. Damodaran
  • Published 30 June 2005
  • Business
  • New York University Stern School of Business Research Paper Series
It is not uncommon in private company and acquisition valuations to see large premiums attached to estimated value to reflect the 'value of control'. But what, if any, is the value of control in a firm, and if it exists, how do we go about estimating it? In this paper, we examine the ingredients of the control premium. In particular, we argue that the value of controlling a firm has to lie in being able to run it differently (and better). Consequently, the value of control will be greater for… 
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We are grateful to Lynch, Jones, and Ryan, Inc. for use of the I/B/E/S data base and to Lawrence Brown, James Meindl, Jerry Newman, Gerald Salancik, participants in the Northeastern University Human