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How to value a private company? : Case of Miele Korea

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Frame of Image  how to do it themselves for two reasons. First, understanding valuation is critical for successful acquisition by not overpaying beyond synergy potential. Second, it has become a prerequisite for meaningful participation in a company's resource-allocation decisions. This paper introduces assets-, market-, and cash flow- based valuation methods for a non-listed company and applies them to the case of Miele Korea. Miele & Cie, KG, a global home appliances manufacturer headquartered in German, has intended in 2005 to enter into the Korean market by acquiring a subsidiary of Ssangyong Corporation, Komie Ltd., an exclusive distributor of Miele products in Korea. The general manager of Miele wants to know what the maximum price is they can pay for the successful deal-making of the privately owned company.
Key words: acquisition for international growth, valuation of private companies, valuation methods, Miele Korea.
2
In late January of 2005, Mr. Markus Miele, chairman of Miele & Cie, KG or a global home appliances manufacturer headquartered in German, heard interesting news from his staff. Since they were suffering from serious liquidity problems, Ssangyong Corporation was planning to divest one of their lucrative subsidiaries, Komie Ltd., an exclusive distributor of Miele products in Korea. Markus Miele thought that this could be a good opportunity for Miele completely to enter into the attractive Korean market. The demand of Korean customers for premium home appliances was cons


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Title How to value a private company?
Similar Titles
Sub Title

Case of Miele Korea

Material Type Reports
Author(English)

Cho, Seong Ho

Publisher

Seoul:KDI School of Public Policy and Management

Date 2008
Series Title; No KDI School Working Paper Series / 08-06
Pages 34
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Industry and Technology < Entrepreneurship
Holding KDI School of Public Policy and Management

Abstract

"In acquisitions of private companies, the valuation of a private target is the financial analytical skills that general managers may want to learn and understand more than any other. Rather than rely entirely on financial specialists, managers would like to know how to do it themselves for two reasons. First, understanding valuation is critical for successful acquisition by not overpaying beyond synergy potential. Second, it has become a prerequisite for meaningful participation in a company's resource-allocation
decisions. This paper introduces assets-, market-, and cash flow- based valuation methods for a non-listed
company and applies them to the case of Miele Korea. Miele & Cie, KG, a global home appliances manufacturer headquartered in German, has intended in 2005 to enter into the Korean market by acquiring a subsidiary of Ssangyong Corporation, Komie Ltd., an exclusive distributor of Miele products in Korea. The general manager of Miele wants to know what the maximum price is they can pay for the successful deal-making of the privately owned company."