VALUATION OF PARCELS
INTRODUCTIONThe purpose of conducting a valuation of the Army's organic industrial base
prior to privatization is to establish a range of value for analysis and to create
the conditions for subsequent negotiation (McKinsey, 2001, p. 3). In the case of
a sale of these parcels under an Army determination of “excess to ownership
but not excess to need,” the target market for the sales of the assets is, by definition, current or potential producers of ordnance materiel.Valuation methodologies are open to biases, so it is typical to use multiple
methods and assumptions to create an informed picture of the range of potential value for an asset. Corporate asset sales and mergers often take place at
prices that differ significantly from what valuations would predict. This variance reflects the private information held by buyers and sellers at the time of
actual sale. This private information is not always revealed in valuation
methodologies, and it may only be revealed in a fully competitive sale. Army
ordnance parcels are real assets with potential to produce income from manufacturing and leasing operations. Like all risky assets, value is determined by
|• ||Magnitude of expected net cash flows.|
|• ||Timing of expected net cash flows.|
|• ||Risk associated with these cash flows.|
This appendix outlines the techniques used in this study to create a range of
possible values for Army ordnance parcels, which are then used in estimates of____________________
Questia, a part of Gale, Cengage Learning. www.questia.com
Book title: Rethinking Governance of the Army's Arsenals and Ammunition Plants.
Contributors: W. Michael Hix - Author, Ellen M. Pint - Author, John R. Bondanella - Author, Bruce Held - Author, Michael V. Hynes - Author, David Johnson - Author, Art Pregler - Author, Mike Stollenwerk - Author, Jerry Sollinger - Author.
Place of publication: Santa Monica, CA.
Publication year: 2003.
Page number: 287.
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