Source:Koeplin, Sarin, and Shapiro (2000).
Note that,with the exceptionofbook value multiples,the
privatecompanieswereacquiredatmultiplesabout 20 to 30
percentlowerthanthosepaidforpublicly tradedfirms;the
discount waslarger (40 to 50 percent) for foreignprivate
firms. Koeplin et al. do note that notwithstanding their
attemptstogetacontrolledsample,theprivatecompaniesin
theirsampleweresmallerandhadhighergrowthratesthan
the publicly traded companies.
Canyouvalueaprivatecompany(asset),then,bylookingat
thepricing of similar private companies (assets)? In some
cases you can, if the following conditions hold:
- There are a number of private businesses that are
similarin theirfundamentalcharacteristics(growth,
risk, andcash flows) to theprivate businessbeing
valued.