Technical - Valuing Private and Public Companies
- 01:09
Investment Banking Superday interview technical question - Do those valuation techniques apply to both private and public companies?
Downloads
No associated resources to download.
Transcript
And are those valuation techniques, uh, applicable to both private and public companies? Or do they only work on one or the other? Well, it really depends because obviously with public companies you have access to their financial statements, which means that can give you a very good idea about their revenues and their leverage and how, what, what kind of position the companies it's in, what the outlook is.
Whereas if it's a private company, you may not have access to that information. You may not even have access to its earnings, at which case it's much trickier.
Let's say you are looking at the wac for example, with a, with a public company, you can very easily, well, I say easily, it's quite complex, but you can work out the cost of equity with private companies. That's gonna be much trickier. You might have to look at the book value of equity or the book value of debt, which is how much recorded debt there is. The book value of equity, you'd be looking at total assets minus total liabilities and for the, for the equity shareholders.
So it, it really does depend and definitely in term for both of them, it's gonna be trickier with private market, with private markets 'cause you just have less financial information.
But you, there are ways to work your way around it in, in both scenarios for, for different valuation methods.