Control Premium Calculator

✖Takeover Price represents the total consideration offered by the acquirer to the shareholders of the target company in exchange for their ownership stake.ⓘ Takeover Price [TPR]			+10% -10%
✖Market Price refers to a place where buying and selling of products is done at a specified market price set by the market forces.ⓘ Market Price [MP]			+10% -10%
✖Estimated Price refers to the expected or projected amount that one party (acquiring company) is willing to pay to acquire another company.ⓘ Estimated Price [EP]			+10% -10%

✖Control Premium is the additional amount that an investor is willing to pay to acquire a controlling interest in a company compared to the current market value of the company's equity.ⓘ Control Premium [CLP]

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Formula

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Control Premium

Formula

`"CLP" = ("TPR"-"MP")/"EP"`

Example

`"1.002857"=("5005"-"1495")/"3500"`

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Control Premium Solution

STEP 0: Pre-Calculation Summary

Formula Used

Control Premium = (Takeover Price-Market Price)/Estimated Price
CLP = (TPR-MP)/EP
This formula uses 4 Variables

Variables Used

Control Premium - Control Premium is the additional amount that an investor is willing to pay to acquire a controlling interest in a company compared to the current market value of the company's equity.
Takeover Price - Takeover Price represents the total consideration offered by the acquirer to the shareholders of the target company in exchange for their ownership stake.
Market Price - Market Price refers to a place where buying and selling of products is done at a specified market price set by the market forces.
Estimated Price - Estimated Price refers to the expected or projected amount that one party (acquiring company) is willing to pay to acquire another company.

STEP 1: Convert Input(s) to Base Unit

Takeover Price: 5005 --> No Conversion Required
Market Price: 1495 --> No Conversion Required
Estimated Price: 3500 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

CLP = (TPR-MP)/EP --> (5005-1495)/3500

Evaluating ... ...

CLP = 1.00285714285714

STEP 3: Convert Result to Output's Unit

1.00285714285714 --> No Conversion Required

FINAL ANSWER

1.00285714285714 ≈ 1.002857 <-- Control Premium

(Calculation completed in 00.004 seconds)

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Credits

Created by Aashna

IGNOU (IGNOU), India

Aashna has created this Calculator and 50+ more calculators!

Verified by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

Vishnu K has verified this Calculator and 200+ more calculators!

< 10+ Mergers and Acquisitions Calculators

Post Merger Value of Merged Company

Go Post Merger Value of Merged Company = Pre Merger Value of the Acquirer+Pre Merger Value of Target Company+Synergies Generated-Cash Paid to Shareholders

Goodwill

Go Goodwill = Consideration Paid+Fair Value of Non Controlling Interest+Fair Value of Equity Previous Interest-Fair Value of Net Assets Recognized

Accretion Amount

Go Accretion Amount = ((Purchase Basis)*(Yield to Maturity/Accrual Period Per Year))-Coupon Interest

Gain of Acquirer

Go Gain of the Acquirer = Synergies Generated-(Price Paid for Target Company-Pre Merger Value of Target Company)

Post Merger EPS

Go Post Merger Eps = Total Earnings of the Acquirer Post Merger/Total Number of Shares of Acquirer

Control Premium

Go Control Premium = (Takeover Price-Market Price)/Estimated Price

Post Merger Share Price of Acquirer

Go Post Merger Share Price of Acquirer = Acquirer Pre Merger PE Ratio*Acquirer Post Merger Eps

Takeover Premium

Go Takeover Premium = Price Paid for Target Company-Pre Merger Value of Target Company

Post Merger PE

Go Post Merger Pe = Weighted Average Eps of Acquirer+Weighted Average Eps of Target

Merger Arbitrage Spread

Go Merger Arbitrage Spread = Risk Premium+Risk Free Rate

Control Premium Formula

Control Premium = (Takeover Price-Market Price)/Estimated Price
CLP = (TPR-MP)/EP

What do you mean by Control Premium ?

Control Premium refers to the additional value or premium that an investor is willing to pay for a controlling interest in a company compared to the market value of its publicly traded shares. When an entity acquires a controlling interest in a company, they gain the ability to influence or control its strategic decisions, operations, and management. This control typically comes with certain privileges, such as the ability to appoint board members, make significant corporate decisions, and influence the company's direction. Because of these privileges and the potential for increased profitability or strategic advantages, acquiring a controlling interest often commands a premium over the company's market value. The control premium can vary depending on various factors, including the level of control being acquired, the company's industry, its growth prospects, and the prevailing market conditions.

How to Calculate Control Premium?

Control Premium calculator uses Control Premium = (Takeover Price-Market Price)/Estimated Price to calculate the Control Premium, Control Premium reflects the value associated with having control over strategic decisions, management appointments, and operational policies. Control Premium is denoted by CLP symbol.

How to calculate Control Premium using this online calculator? To use this online calculator for Control Premium, enter Takeover Price (TPR), Market Price (MP) & Estimated Price (EP) and hit the calculate button. Here is how the Control Premium calculation can be explained with given input values -> 1.002857 = (5005-1495)/3500.

FAQ

What is Control Premium?

Control Premium reflects the value associated with having control over strategic decisions, management appointments, and operational policies and is represented as CLP = (TPR-MP)/EP or Control Premium = (Takeover Price-Market Price)/Estimated Price. Takeover Price represents the total consideration offered by the acquirer to the shareholders of the target company in exchange for their ownership stake, Market Price refers to a place where buying and selling of products is done at a specified market price set by the market forces & Estimated Price refers to the expected or projected amount that one party (acquiring company) is willing to pay to acquire another company.

How to calculate Control Premium?

Control Premium reflects the value associated with having control over strategic decisions, management appointments, and operational policies is calculated using Control Premium = (Takeover Price-Market Price)/Estimated Price. To calculate Control Premium, you need Takeover Price (TPR), Market Price (MP) & Estimated Price (EP). With our tool, you need to enter the respective value for Takeover Price, Market Price & Estimated Price and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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