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09-09-2025 : Size discount and illiquidity discount are like two sides of the same coin.

Eduniversal, listed on Euronext Access (formerly Marché Libre, whose reputation Euronext sought to improve by giving it its name), has sales of €4.6 million and net income of €1.1 million with a team of 17 people working on its business of ranking business schools. I am not a shareholder.

On 6 August, it launched its public withdrawal offer, approved by Euronext.

The CEO and founder of Eduniversal, who owns 90% of the shares, chose a chartered accountant to value his company at €3.1 million. This valuation contains several shortcomings that left Euronext unmoved, assuming its services even read it:

1/ A cost of capital of 19.5%!

For a company with a beta of 1 and an average cost of capital in the economy of around 8%, one can only be surprised by 19.5%! The expert arrives at this truly astonishing figure by adding a size premium of 10%. He does not refer to it as a liquidity premium, as this would be incongruous in a takeover bid that offers liquidity to shareholders. But isn't the size premium for small companies just another name for a liquidity premium? After all, a small company will necessarily have low liquidity. But this so-called "size" premium is very useful in justifying the offer price, which otherwise would have had to be nearly four times higher with a cost of capital of 8%, or twice as high if 12% had been used.

2/ Omission of available cash in the DCF 

While the expert remembers to add cash flow in the EBITDA multiples method, he forgets to do so in the DCF method (!), thereby underestimating this value by 11%.

3/ Outdated accounts

The valuation is based on certified accounts, the most recent of which date from 30/9/23, and on accounts as at 30/9/24 that are described as "provisional" and are not certified! Meanwhile, the 2025 accounts, which are now closed as at 31 March, have been available since the end of June 2025 (as they must be submitted to the tax authorities within 3 months).

Any evaluator relies on recent certified historical accounts. An expert, who is not independent in name only, would have insisted on working with these accounts, available since the end of June 2025, even if it meant delaying the launch of this delisting by several weeks, rather than working with the uncertified "provisional" accounts as at 30/9/24. Who can be convinced that there was an absolute urgency to launch this delisting on 6 August, unless, of course, the accounts as at 31 March 2025 are better than the "provisional" accounts as at 30 September 2024?

Conclusion 

Unfortunately, simply changing the name of a market is not enough to put an end to shameful practices, as illustrated by the delisting of MAB (of which I am a shareholder) before the summer. For this to happen, Euronext would need to devote time to the issue and use its powers. The delisting of Eduniversal on 6 August with Euronext's agreement is yet another unfortunate example of this.

19-07-2025 : Value or premium, which comes first?

Unlike the chicken and the egg, there is a simple answer to this question. In a takeover bid, experienced investment bankers first determine the value of the target for their client and then deduce the premium resulting from the comparison between this value and the share price.

Novices, on the other hand, are content to lazily add a standard premium (e.g. 35%) to the latest share price to determine the offer price. They then run the risk of a rebellion by shareholders who know how to count, and of the offer failing.

The investment banker's role in valuation is therefore not simply that of an Excel wizard, as the naive might think. He must educate his client and not waver in the face of his greed or ignorance; and convince him, if he wants to achieve his ends, that he must pay the value rather than fail to cross the threshold for a takeover or delisting. This is where the most professional people come into their own.

Recent examples show this:

- NDK (advised by Crédit Agricole du Languedoc) on PAROT: a premium of +243% on the three-month average price, a price corresponding to the multi-criteria value for this small, illiquid stock not followed by financial analysts.

- Talan (advised by ODDO BHF) on Micropole: a premium of 190%.

- When the Arnault group (advised by Crédit Agricole CIB) offered €44,000 per Financière Agache share, to acquire the 2,189 shares it did not own (0.07% of the capital), to take private this little-known holding company, part of the chain of control of LVMH, against an acquisition price of €2,500 to €3,500 (on 41 shares au-fil-de-l'eau) in the previous 12 months.This represents a premium of 1,157% (sic). A record, no doubt. But quality has never been cheap.