How Do You Value A Private Company?

1.	How Do You Value A Private Company?
Answer» You use the same methodologies as with public companies: public company comparables, precedent transactions, and DCF. But there are some differences: You MIGHT apply a 10-15% (or more) discount to the public company comparable multiples because the private company you're VALUING is not as "liquid" as the public comps. You can't use a premiums analysis or future share price analysis because a private company doesn't have a share price. Your VALUATION shows the Enterprise Value for the company as opposed to the implied per-share price as with public companies. A DCF gets tricky because a private company doesn't have a market capitalization or Beta - you would probably just estimate WACC based on the public comps' WACC rather than trying to calculate it. You use the same methodologies as with public companies: public company comparables, precedent transactions, and DCF. But there are some differences:

Answer»

You use the same methodologies as with public companies: public company comparables, precedent transactions, and DCF.

But there are some differences:

You MIGHT apply a 10-15% (or more) discount to the public company comparable multiples because the private company you're VALUING is not as "liquid" as the public comps.
You can't use a premiums analysis or future share price analysis because a private company doesn't have a share price.
Your VALUATION shows the Enterprise Value for the company as opposed to the implied per-share price as with public companies.
A DCF gets tricky because a private company doesn't have a market capitalization or Beta - you would probably just estimate WACC based on the public comps' WACC rather than trying to calculate it.

You use the same methodologies as with public companies: public company comparables, precedent transactions, and DCF.

But there are some differences:

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