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Understanding Risk in Business Valuation

Will Spider-Man, The Fantastic 4 and Iron Man Help the Shareholders of Disney?

The four billion dollar acquisition of Marvel Enterprises by the Walt Disney Company was one of the major business stories of 2009. Whether being in business with Marvel will help Disney’s bottom line and increase shareholder value remains to be seen.

Even with Disney’s careful valuation of Marvel’s assets, which include a library of over 5,000 characters featured in a variety of media, and businesses that include licensing, film production, and publishing, the risk is a great one. Disney will not see the full benefits of the acquisition for quite some time. This begs the question, Will the likes of Spiderman, The Fantastic Four and Iron Man help the mere mortals at Disney and its shareholders? The answer to this question may rely on how accurately risk was evaluated in this transaction.

In this broadcast of Forensic Perspectives, business valuation expert Mark S. Gottlieb discusses the three types of risk often considered in a business valuation analysis: Business Risk, Financial Risk, and Liquidity Risk.