Imagine we're looking to buy one share in a company. This company has got millions of shares thus I am definitely not buying a controlling stake. I'm buying a minority stake So how can I value that minority stake? Well the simple way, if it's a publicly listed company is to go out to the stock market Here I'll the price for a minority stake and that's often known as your unaffected share price A nice way to check this is by a trading comps. Go out to similar companies, where people are buying minority stakes Calculate some ratios and use them to check that your company is being correctly valued Okay, so that's your minority stake But what if I'm looking to buy a controlling stake? I'm looking to buy more than 50% of the voting rights Well if that's the case, I can't just use the unaffected share price Instead, I'm going to need to pay a little bit more. I'm going to need to pay a control premium And as it says here, that's often between 20-40% So why do I need to pay that control premium? Well I need to incentivise investors to sell to me Remember, I'm not just looking for one or two investors to sell me a couple of shares I'm looking to buy more than 50%. I will then control the company, I can hire and fire people and change processes But where can I get that control premium from? Is it 20% or is it 40%? Or is it more? Instead of looking at the stock market, we now need to look towards the M&A market (your mergers and acquisition market) Here you can find prices for a controlling stake And transaction comparables is it a great method to use to calculate that premium