4.5: En bloc value
En bloc value is the value of all the common shares of the company assuming all the said shares have the same rights and influence.
The en bloc value of a company is best illustrated with an example:
- Enterprise fair market value is determined using – for example – the capitalized cashflow method.
- Redundant assets are added to the enterprise value, interest bearing term debts are deducted, and a few other situational additions or subtractions are made to arrive at the total equity value.
- The total equity value represents the value of all the shares of the company, including all preferred shares and different classes of common shares.
- The value of the common shares of the company is found by deducting the retractable or redeemable amount of the preferred shares from the total equity value. The result is the total en bloc value.
- The en bloc value per share is the value of all the common shares divided by the total number of all the common shares.
It is important to note that not all common shares have the same fair market value, i.e. the en bloc value of a common share is not necessarily its fair market value. The fair market value of some classes of shares, or some blocks of shares, can be affected by their minority status or lack of control. Control shares may even enjoy a premium. The fair market value of the subject shares is thus the en bloc value adjusted for appropriate discounts or premiums.
Contact MVI for assistance in determining the en bloc value of your company.