Hello,
I am studying for an exam and have a practice question on valuations of businesses.
I want to use the P/E ratio and DVM to value the business, the problem is it is an LLP. I can do the calculations if it is a business with shareholders and work out the dividends, but with an LLP the members obviously don't get dividends and my answers are not coming out right.
We are told that there are 70 members and they have 45% of the 'profit before members' remuneration and profit shares' figure.
I have done the calculation by using the whole of the 45% of the profits, and by dividing that by a further 70 between the members, but it doesn't look right. Any help in the right direction or on how to do a valuation of a partnership would be much appreciated.
Thank you.
I am studying for an exam and have a practice question on valuations of businesses.
I want to use the P/E ratio and DVM to value the business, the problem is it is an LLP. I can do the calculations if it is a business with shareholders and work out the dividends, but with an LLP the members obviously don't get dividends and my answers are not coming out right.
We are told that there are 70 members and they have 45% of the 'profit before members' remuneration and profit shares' figure.
I have done the calculation by using the whole of the 45% of the profits, and by dividing that by a further 70 between the members, but it doesn't look right. Any help in the right direction or on how to do a valuation of a partnership would be much appreciated.
Thank you.