Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
The option value was estimated using the Black-Scholesmodel.Theprobabilitywasestimated, using the expected return of 16.26% for ...
Theotherapproachtodealingwithilliquidityistoadjustthe discount rate used in discounted cash flow valuation for illiquidity. In p ...
periods. Using data from 1984–2004, Venture Economics estimated that the returns to venture capital investors havebeen about 4 p ...
Thethreedifferentapproachestoadjustingdiscountratesare similartotheapproachesusedtoestimateilliquiditydiscounts onvalue.Theconst ...
Thefirsttermisthepresentvalueofannualcashflowsduring theholdingperiod—$0.60(60percentof$1) growingat 4 percentayearforthenextfiv ...
rateforilliquidity,otherthantonotethatitcanbebackedout of observed illiquidity discounts in restricted stock studies. ILLUSTRATI ...
discount. If we increase discount rates for illiquidity in perpetuity ratherthan the fiveyears that we used in both calculations ...
Source:Koeplin, Sarin, and Shapiro (2000). Note that,with the exceptionofbook value multiples,the privatecompanieswereacquiredat ...
There is a large enough number of transactions involving these private businesses (assets), and information on transactions pri ...
andearnings.Notwithstandingtheselimitations,youdosee relative valuation widely used in some areas of private business valuations ...
fundamentalsofthefirms(includingsize,growth,risk,anda measureofilliquidity).Theresultingregressioncanthenbe used to estimate the ...
RegressingEV/sales ratiosforthesefirmsagainstoperating margins and turnover ratios yields the following: (T-statistics are in br ...
KristinKandyhasapretaxoperatingmarginof25%,azero turnoverratio(toreflectitsstatusasaprivatecompany),and a beta(total) of2.94.Thi ...
Thequestion of whethera growing and successful private companyshouldgopublicdoesinvolvetrade-offs.Itistrue that publiclytraded f ...
sectors.Theempiricalevidenceissupportiveofthis hypothesis. Whataboutpubliclytradedcompaniesthatgoprivate,asis oftenthecasewithma ...
turnoverandanemphasisonrisky,smallmarketcapstocksto underperform the market. 80 Extending this analysis to venture capital and p ...
capital.Thesecondiscenteredontheliquidityoftheassets owned by a firm. Theliquidityorlackthereofofthesecuritiesissuedbyafirm canh ...
Finally,theliquidityorlackthereofofsecuritiescan have consequences for how management at companiesgets compensated.Inrecent yea ...
definethesecostsbroadlytoincludethebid-askspreadanda priceimpact.Wethenlookedattheempirical evidenceon howmuchmarketsvalueliquid ...
its assets can affect investment, financing, and dividend policy.Ingeneral,firmswithlessliquidassetsandsecurities willtendtobemo ...
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