Title: Valuation perspectives of family-owned real-estate companies in Saudi Arabia

Authors: Rayan AbdulJabbar; Michael Neubert

Addresses: ISM International School of Management, 17, Boulevard Raspail, 75007 Paris, France ' ISM International School of Management, 17, Boulevard Raspail, 75007 Paris, France

Abstract: The aim of this paper is to demonstrate the effect of capital restructuring for a family-owned real-estate development company in Saudi Arabia. The paper expands the understanding of value creation in a family business with a multiple projects portfolio. The study is approached as a single-case study research design. The main sources of evidence are financial statements, a small and medium sized enterprise (SME) interview, and a ten-year financial analysis. The data was analysed and compared to national competitors to show the various valuation outcomes, including the effect of SPV creation. The theoretical methodologies for valuation used, are book value, relative measures, earning capitalisation and value creation. The paper provides qualitative insight about how the valuation of real-estate development companies in Saudi Arabia can increase. It suggests that for family businesses especially in real-estate development, the adaptation of an appropriate capital structure is vital to give a fair valuation of the company. One finding of this study is that family businesses in Saudi Arabia have less desire for financial restructuring. Moreover, the paper discloses that SPV creation has increased the valuation due to the elimination of other projects' liabilities.

Keywords: finance; valuation; SPV; special purpose vehicle; financial restructuring; property development; Saudi-Arabia.

DOI: 10.1504/IJTCS.2019.096875

International Journal of Teaching and Case Studies, 2019 Vol.10 No.1, pp.72 - 86

Received: 24 Jul 2018
Accepted: 17 Aug 2018

Published online: 22 Nov 2018 *

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