When valuing a subject company for sale, acquisition, or estate planning, the
market-based valuation approach frequently utilizes pricing multiples from
guideline public companies. This approach is simpler to apply when the subject
company is public, as the risk characteristics between guideline public
companies and another public company are generally more comparable. However,
this approach may not be as easily applied to subject companies that are
private, as the market participants may be undiversified investors subject to
additional risks. This presentation addresses how guideline public companies'
multiples can be adjusted for the valuation of private companies where firm
specific risk is an important issue. The Authors discuss a practical method for
determining a discount for company-specific risk consistent with cost of capital
considerations associated with private companies.
These sessions are available ONLINE ONLY. This PDF
and MP3 downloads will be available for 3 days
after the purchase date. Please download