A nonlinear state marginal price vector model for the task of business valuation. A case study: The dimensioning of IT-service companies under nonlinear synergy effects

Christian Toll () and Olaf Kintzel
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Christian Toll: Fernuniversität Hagen
Olaf Kintzel: Fernuniversität Hagen

Central European Journal of Operations Research, 2019, vol. 27, issue 4, No 9, 1079-1105

Abstract: Abstract In the present contribution we present a nonlinear extension of the innovative linear investment-oriented company valuation method and so-called state marginal price vector model of Toll which represents a two-step procedure separated into a base and a valuation approach. As novel aspect we address nonlinear synergy effects in M&A’s. For this purpose we introduce a nonlinear framework within a semi-discrete convex optimization approach. As capital market assumption we simulate an imperfect market. To demonstrate the usefulness of the method, we address a case study of a merger of two IT-service companies. The related valuation and dimensioning of capacities is done by solving a multi-period newsvendor model under stochastic demand. The demonstrated nonlinear framework is shown to be suitable for a wide range of business valuation tasks.

Keywords: Investment analysis; Company/business valuation; Nonlinear convex programming; Nonlinear synergy effects; Multi-period newsvendor/newsboy model; IT-service companies (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10100-018-0535-x

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