Valuation of family limited partnerships

Abstract

The basic purpose of this work is to study the purposes that create the need of valuation for Family Limited Partnerships and to relate the appropriate technique/s which can help in making a better decision for that particular purpose. References are taken from many books, articles and other materials and also at many places the valuable write ups of some authors or writers are sited in order to provide the basis to the intended users of this research work. Value of business is estimation only and being which it is subjective in nature. Debates are going on and different views are prevailing regarding applicability of specific techniques, as well as on validity and correctness of the formulas used for estimation. These estimates and subjectivity in valuation makes the reliability of the final output questionable. The objective is not to go through the roots that how a specific technique is emerged and on which financial or economic theory it is based. The existing literature on valuation techniques is very choosy, with some of the valuation techniques being thoroughly analysed and others, such as how to estimate free cash flows and reconciling different techniques, not receiving the attention they deserve. There has been a serious dearth of access to literature on valuation small and family managed businesses in India. Being an evolving field of finance and accountancy, there are very little developed doctrines relating to the application of the specific method amongst various valuation methods. We have relied on the most popular techniques available and used by valuation professionals in corporate world. Also, we have also relied on some of the knowledge we have gained through my courses and my work experience in valuation.