A Methodology for Valuing Tiered Entities

Webb Dennis A and Masten Lari B
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Webb Dennis A: Primus Valuations
Masten Lari B: Masten Valuation

Journal of Business Valuation and Economic Loss Analysis, 2006, vol. 1, issue 1, 40

Abstract: The conventional approach to valuing limited partnerships is the net asset value method; however, when used to value interests in tiered entities, this approach can produce outlandish returns. The model failure occurs when its underlying assumptions are violated, and/or when the hypothetical buyer's expectations and the facts and circumstances of the case are not adequately represented. This article offers proof of the failure, an alternative approach to the entire process, and application via a case study taken from an actual assignment. The recommended process can be used for simple to extremely complex tiered asset ownership fact patterns and structures.

Keywords: tier; layer; discount; fractional interest; partnership; real estate; business valuation (search for similar items in EconPapers)
Date: 2006
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DOI: 10.2202/1932-9156.1006

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