The Intent
You want to understand what 'fair value' actually means in the context of a mandatory or optional share repurchase.
How I Solve It
I interpret fair value using the 25 Factors, not mechanical percentages. Factor #4: Return on Investment, Factor #5: Liquidity, Factor #21: Minority Interest, and Factor #24: Risk are decisive in determining whether fair value aligns with economic reality.
The 5 Senses Inspection Report confirms whether the business can absorb the repurchase without operational strain.
Experience
It is vital because "What is fair value in a share repurchase?" is not a mechanical calculation. It is a real-world judgment about risk, control, sustainability, and transferability — and that judgment is where 10–15 years of owner-operator and valuation experience, your gut–brain axis, does the heavy lifting.
Why It Is Not Mechanical
On paper, valuation appears formula-driven. In reality, governance rights, risk concentration, growth durability, market conditions, and stakeholder dynamics materially affect value.
Where Experience Changes the Number
Decisions around normalization, premiums, discounts, projections, and defensibility require judgment formed through lived ownership, negotiation, and financial accountability.
Why the Gut–Brain Axis Matters
The brain performs disciplined financial analysis. The gut recognizes unrealistic narratives, hidden leverage, emotional distortions, and deal risk. Together they produce conclusions that withstand scrutiny.
Protecting Financial Lives
The final number affects wealth, control, solvency, tax exposure, and long-term relationships. Requiring 10–15 years of serious hands-on business and valuation experience ensures the answer is fair, defensible, and durable. See my Experience page.
The Result
You receive a fair value conclusion that balances equity, sustainability, and defensibility.