An opening
It is important to value the ownership of a small business in order to estimate its economic value. It is important to conduct a valuation in order to establish the business’s value. Trugman believes that valuations can be essential in divorce proceedings, for taxation purposes, to establish ownership of partners, or even when determining the sale price. In this study, business value is used to determine how much Gucci paid for its acquisitions. Gucci’s financial statements between 2001 and 2003 show that the increase in expenses was due to the decrease of operating profits.
In 1999, Gucci acquired YSL. The purchase was valued at $1 billion, as YSL had been one of the top fashion names for many years. Gucci may have been able to gain a competitive advantage by acquiring YSL because it produced high-end Italian shoes. Gucci’s talented creative team would have also been able help in the acquisition’s success. Gucci could have used its creative team to ensure the success of the new acquisition.
Ownership changed in 1983 following the death Gucci, the founder. Maurizio Gucci took over Gucci as his father had left him 50% stake in the company when he passed away. Maurizio Gucci owned Gucci legally at that time, despite the support of his cousin Paolo. In 1999, Gucci’s leather models ranged between $600 and $1,000. The competitive analysis revealed that Gucci was in a middle-range position within the industry. 15-20 also had financial results between $0.5B and $1B, while 10 of them were rated at $100M to $0.5B in sales.
Gucci is a privately-owned company. It benefited from this in many ways. Undisputed ownership is one of the benefits. Gucci, his sons and the Gucci Company were able to maintain control because they owned it privately. This was the main reason for its success. The company didn’t have to follow any directions or officers. When a company is privately owned, it’s possible to sell shares of stock in order to fund operations without losing control, as long as more than half the stock belongs to the owner.
Limited disclosure is also an advantage. Privately owned businesses do not need to submit financial documents or other informational materials to various agencies. Gucci, as an example, disclosed only the information requested by states where it operates. These reports must be filed, which is an inconvenience because filing fees are required. If a business is privately owned, however, it is only the name and address of the company, along with the registered agent and officers, that are disclosed in its annual report. Gucci’s financial and operating information remained private because it was privately-owned.
Gucci is a privately-owned company and therefore did not give stock to employees. Nevertheless, it could have been beneficial to Gucci. It ensures employees are a bigger part of the firm, which keeps them motivated. It is easier to motivate your employees when they have stock options because their rewards will increase based on how the business performs. This keeps them motivated. Stock options can also reduce employee turnover. Stock options are a great way to keep employees in a successful company.
Stock options come with risks. The company, not the individual employee, is the one who influences the stock market. Stock options encourage employees to work harder. But if stock options do not cover all employees, the hardworking ones will be affected. Stock options are an extra expense. Employees not following tax implications would make the stock more expensive and diluted.
In September 1993, half the company’s shares (or $170 million) represented its book value. In 1994, the company’s price structure was reviewed and it came up with a price of $350m. In addition, the company’s value increased due to the issuance of 20,000,000 shares. A rigorous marketing campaign (which increased the advertising budget) also contributed to the rise in value.
Gucci is a Dutch company that trades in New York, Amsterdam and other markets. These markets are populated by many luxury consumers and working class women. The Netherlands was chosen as the location for the company because it offers tax advantages, including tax reliefs to companies that operate in the area.
Artemis is an online retailer that sells women’s clothing. It kept YSL Couture as a part of its portfolio because the company was innovative and created modern dresses for women. Artemis aimed to dominate women’s clothing. Gucci bought Sergio Rossi, a high-fashion shoe company that matched Gucci’s product line. The stock price of the company is influenced by how many shares are issued. Gucci released shares between 1995 and 1999, which explains the rise in price.
ConclusionGucci’s statements of financial position show that, despite the drop in operating profit, the company is still in good health. Its success is attributed to the acquisitions the company made, which helped it reach a larger audience. Gucci was able to prosper because of its private ownership, which ensured that it had proper control. Gucci is a case study that shows the difficult journey towards success.