Comparative Approach and Risk Factors in Business Valuation of Shares in Non-Public Companies

Introduction. This study examines the methodological considerations involved in applying the comparative approach and incorporating risk factors when assessing shares in the capital of non-public companies. The lack of open market information significantly complicates the objective assessment of the value of such companies, particularly in the Bulgarian market. Aim and tasks. This study aims to derive the value of a share of a non-public company by comparing it with public companies and making necessary adjustments with a discount for size and specific risk. Results. This study applies a comparative approach to the valuation of companies listed on the Bulgarian capital market based on economic indicators for 2021-2023. The value of a company's share was determined based on financial multiples (IC/RI, IC/EVA, ROE, etc.) and a comparative approach, with adjustments for uncontrollability, liquidity, company size, and specific risks. Based on the calculated multiples, companies with higher profitability and efficiency indicators (ROE, ROA, and ROIC) demonstrated better financial stability and competitiveness. For example, ROE values ranged from 0.09 to 0.84, ROA from -0.013 to 0.28, and ROIC from 0.008 to 0.64, with the best performers showing consistently positive results. In contrast, companies with poor or negative performance across most ratios may face higher risk exposure and ineffective management. This is evidenced by extremely low or negative values for IC/RI (–68.99 to 14.42) and IC/EVA (–1,066.39 to 20.11), reflecting inefficient capital allocation and weak value creation. Negative ROA (–0.012) and low ROIC (0.008 to 0.039) suggest potential operational inefficiencies. Conclusions. The comparative approach to business valuation enables the estimation of the value of a privately held (closed-type) company by applying appropriate adjustments to the financial data of comparable publicly traded (open-type) companies. This study proposes an algorithm for determining a company’s share when considering controlling/non-controlling, the degree of liquidity of a block of shares, size, and specific risk through a comparative valuation approach. Applying such an algorithm in valuation practice is primarily based on the valuer’s professional experience. It can be advantageously used when valuing privately held companies.Introduction. This study examines the methodological considerations involved in applying the comparative approach and incorporating risk factors when assessing shares in the capital of non-public companies. The lack of open market information significantly complicates the objective assessment of the value of such companies, particularly in the Bulgarian market. Aim and tasks. This study aims to derive the value of a share of a non-public company by comparing it with public companies and making necessary adjustments with a discount for size and specific risk. Results. This study applies a comparative approach to the valuation of companies listed on the Bulgarian capital market based on economic indicators for 2021-2023. The value of a company's share was determined based on financial multiples (IC/RI, IC/EVA, ROE, etc.) and a comparative approach, with adjustments for uncontrollability, liquidity, company size, and specific risks. Based on the calculated multiples, companies with higher profitability and efficiency indicators (ROE, ROA, and ROIC) demonstrated better financial stability and competitiveness. For example, ROE values ranged from 0.09 to 0.84, ROA from -0.013 to 0.28, and ROIC from 0.008 to 0.64, with the best performers showing consistently positive results. In contrast, companies with poor or negative performance across most ratios may face higher risk exposure and ineffective management. This is evidenced by extremely low or negative values for IC/RI (–68.99 to 14.42) and IC/EVA (–1,066.39 to 20.11), reflecting inefficient capital allocation and weak value creation. Negative ROA (–0.012) and low ROIC (0.008 to 0.039) suggest potential operational inefficiencies. Conclusions. The comparative approach to business valuation enables the estimation of the value of a privately held (closed-type) company by applying appropriate adjustments to the financial data of comparable publicly traded (open-type) companies. This study proposes an algorithm for determining a company’s share when considering controlling/non-controlling, the degree of liquidity of a block of shares, size, and specific risk through a comparative valuation approach. Applying such an algorithm in valuation practice is primarily based on the valuer’s professional experience. It can be advantageously used when valuing privately held companies

Application of mathematical models and hierarchical relationships method of residential properties valuation in Bulgaria

Green Deal and achieving its objectives require changes in the development of the construction and real estate operations sectors. There are many reasons, such as the depletion of natural resources, the transition to a circular economy, decarbonization, and the new tax policies. The transition to ecological construction with minimal energy losses and pollution also means higher construction prices. This goal requires compliance with environmental, social and governance (ESG) standards. This would lead not only to a review of the strategies that companies develop but also to a change in their valuation as a whole and the valuation of individual assets. Therefore, there is a constant need to search for opportunities to improve and obtain more accurate and reliable options in the field of business valuation theory in Bulgarian practice. The relationship, the dependence between the prices of residential properties and the factors that influence them, can be presented in mathematical models, and based on them, an indicative value can be derived

PRACTICAL ASPECTS OF THE CONCEPT FOR VALUE-BASED MANAGEMENT OF BULGARIAN PUBLIC COMPANIES

Оценката на предприемаческата мобилност е в пряка релация със стойността на компанията, като обобщаващ показател, в който са концентрирани интересите на всички заинтересовани от развитието й лица. Детерминирането на стойността е сложен и последователен процес, който се променя във времето и се влия от множество фактори. Независимо от трудностите при определянето й, управлението на процеса на създаване и съхраняване на стойността, е конкретен таргет, който все повече предприятия поставят в основата на своята стратегия и практика. Тя се свързва с концепцията “Value Based Management” – Управление на база стойността (VBM-концепция). Настоящото изследване демонстрира необходимостта от изслед- ване факторите за ефективно управление на собствеността, които рефлектират върху повишаване стойността на компаниите. Емпиричното изследване е осъществено сред извадка от публичните дружества в България, а именно – тези, които са включени в индекса „Дневник 20”. The evaluation of entrepreneur’s activities is directly related to the value of the company as a composite index comprising the interests of all stakeholders interested in its development. Value determination is a complex and continuous process, which is influenced by many factors in the course of time. Regardless of the difficulties related to value determination, the management of the process of creation and preservation of value is a specific target, which more and more companies include in their strategies and practice. It is related to the value-based management concept. The paper substantiates the need for a research on the factors for efficient asset management, which increase the value of the companies. The empirical research was conducted with data for the public companies in Bulgaria included in the Dnevnik 20 index

An adaptive network based fuzzy inference system–genetic algorithm clustering ensemble algorithm for performance assessment and improvement of conventional power plants

Performance measurement and assessment are fundamental to management planning and control activitiesof complex systems such as conventional power plants. They have received considerable attentionby both management practitioners and theorists. There has been several ef?ciency frontier analysismethods reported in the literature. However, each of these methodologies has its strength and weakness.This study proposes a non-parametric ef?ciency frontier analysis methods based on adaptive networkbased fuzzy inference system (ANFIS) and genetic algorithm clustering ensemble (GACE) for performanceassessment and improvement of conventional power plants. The proposed ANFIS-GA algorithm is capableto ?nd a stochastic frontier based on a set of input–output observational data and do not require explicitassumptions about the functional structure of the stochastic frontier. Furthermore, it uses a similarapproach to econometric methods for calculating the ef?ciency scores. Moreover, the effect of the returnto scale of a power plant on its ef?ciency is included and the unit used for the correction is selected bynotice of its scale. GACE is used to cluster power plants to increase homogeneousness. The proposedapproach is applied to a set of actual conventional power plants to show its applicability and superiority.The superiority and advantages of the proposed algorithm are shown by comparing its results againstANN Fuzzy C-means Algorithm and conventional econometric method

PRACTICAL ASPECTS OF THE CONCEPT FOR VALUE-BASED MANAGEMENT OF BULGARIAN PUBLIC COMPANIES

Оценката на предприемаческата мобилност е в пряка релация със стойността на компанията, като обобщаващ показател, в който са концентрирани интересите на всички заинтересовани от развитието й лица. Детерминирането на стойността е сложен и последователен процес, който се променя във времето и се влия от множество фактори. Независимо от трудностите при определянето й, управлението на процеса на създаване и съхраняване на стойността, е конкретен таргет, който все повече предприятия поставят в основата на своята стратегия и практика. Тя се свързва с концепцията “Value Based Management” – Управление на база стойността (VBM-концепция). Настоящото изследване демонстрира необходимостта от изследване факторите за ефективно управление на собствеността, които рефлектират върху повишаване стойността на компаниите. Емпиричното изследване е осъществено сред извадка от публичните дружества в България, а именно – тези, които са включени в индекса „Дневник 20”. The evaluation of entrepreneur’s activities is directly related to the value of the company as a composite index comprising the interests of all stakeholders interested in its development. Value determination is a complex and continuous process, which is influenced by many factors in the course of time. Regardless of the difficulties related to value determination, the management of the process of creation and preservation of value is a specific target, which more and more companies include in their strategies and practice. It is related to the value-based management concept. The paper substantiates the need for a research on the factors for efficient asset management, which increase the value of the companies. The empirical research was conducted with data for the public companies in Bulgaria included in the Dnevnik 20 index