IFRS Conference – Non Controlling Interest


Non controlling interest is a stake ie. percentage of shareholdings, that is not high enough to control the company’s financial and operating policies.

Situation
So assuming if you were buying a 20% stake in a company as a passive investor, how much should you pay for that stake or how much should the seller be selling it for?

20% of net book value? 20% of [fair value of net assets + goodwill]?

Well the answer is:-

20% of value of business LESS the value of non controlling features

Now that we got the formula, we need to work on valuing the business’:-
– assets and liabilities, both tangible and intangible
– goodwill
– non controlling features

Can tell me how?

The moral of the story – We still go a job until the confusion stops.

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