What are the key differences in valuation methods for public and private companies?

What are the key differences in valuation methods for public and private companies?

Public companies are typically valued using market capitalization and comparable company analysis, while private companies often rely on discounted cash flow (DCF) and precedent transactions.

Can you explain how DCF works for private companies?

Sure! DCF involves estimating the future cash flows of a company and discounting them back to their present value using a discount rate.

What about the role of market comparables?

Market comparables involve analyzing similar companies in the same industry to determine a fair valuation based on their financial metrics.

Are there any specific challenges in valuing private companies?

Yes, private companies often lack publicly available data, making it harder to find reliable comparables and assess market conditions.