Calculation of control value and Turkish financial markets

Abstract

The question of Control Share Premium, more widely referred to as the "control premium" in the literature on corporate valuations is treated as a curious area of study by the academic and professional circles. This paper addresses the question of CSP primarily from a conceptual point of view. We point out, here, that, 1) corporate value drivers, summarized a "private benefits of control," that currently are evident and internal to the acquired businesses are the main determinant of the value of the CSP; 2) CSP is indeed relevant in Turkish financial markets; and, 3) The most meaningful approach to calculate control premiums in Turkish financial markets, as in other regions, would be to employ DCF methodology on the "set of private benefits" that are identified in the target company to be acquired based on its on corporate and sectoral merits. Another conclusion is that as CPS has a certain impact on the valuation of overall equity value of a firm, it has a significant impact on the position of minority shareholders with respect to the minority protection rights in the target company.