Techniques and adjustments in valuing privately-held enterprises in Thailand

This article investigates the tools appraisal firms use to value privately-held businesses in Thailand. It also tests for covariation between selected descriptive variables and the techniques valuers employ to assist owners in deciding on their companies’ worth. A review of literature relating both to valuation and to strategic planning served as the basis for hypothesis development and questionnaire construction. All 81 approved Thai appraisal firms received the questionnaire. The main findings are that the number and kind of tools Thai appraisal firms employ vary widely. Furthermore, manager and practitioner characteristics such as education, professional association membership, years of work experience, and cases previously handled as well as an appraisal firm’s age and size sometimes are associated with the valuation techniques applied, account adjustments made, and interest rate alternatives chosen. The study furthermore suggests that reporting justifications for the specific valuation techniques employed and the weights assigned their results would increase transparency, afford clients additional useful information, and provide linkage between theory and actual practice. Reliance on senior practitioners and top managers as questionnaire respondents raises the possibility of key informant bias. Future research might examine the extent to which appraised values resulting from application of the tools respondents say they use to agree with prices subsequently paid in arm’s length, market transactions.