Dacsep

DACSEP

VALUATION OF PRIVATE COMPANIES:

A COMBINATION OF VALUATION APPROACHES

A CASE STUDY OF FAMILY BANK

Table of Contents

CHAPTER ONE: INTRODUCTION………………………………….………………….......2

1.0 Introduction…………………………………………………………………………....2

1.1 Company Description………………………………………………………………….2

1.2 Private Company…………………………………………………………………...….2

1.3 Understanding Corporate valuation……………………………….…………………..4

1.4 Methods of valuation………………………………………………...……………….4

1.5 Valuation Process……………………………………………………………………..5

1.6 Reasons for valuation………………………………………………………………...5

CHAPTER TWO: ANALYSIS DISCUSSIONS AND FINDINGS………………………….9

2.1 Discounted cash flow valuation of family bank…………………………………….....9

2.2 Establishing Discounted Rate…………………………………………………………10

2.3 Estimating Family bank free cash flows to the firm………………………………….15

2.4 Relative Valuation…………………………………………………………………….15

2.5 Comparison of Performance with NSE……………………………………………….17

CHAPTER THREE: ASSET BASED APPROACHES……………………………………..21

3.1 Net Asset Method……………………………………………………………………..22

3.2 Net Adjusted Method……………………………………………………...………….24

REFERENCES……………………………………………………………………………….27

APPENDICES………………………………………………………………………………..28

CHAPTER ONE:

1.0 INTRODUCTION

1.1 Comapany Description

Family Bank (formerly known as Family Finance Building Society) was registered as a Building Society in October 1984 in Kenya under the Building Societies Act and commenced operations in the early 1985. Family Bank later converted into a fully-fledged bank in May 2007 and the main driver for conversion was the need to offer a wider range of products and services to customers.

Family Bank is regulated by the Central Bank of Kenya (CBK) and is also regularly inspected using CAMEL ratings which look at Capital, Assets, Management, Earnings and Liquidity. The ratings by the CBK have been favorable over the years....