How do you value private companies?

Question

Accepted Answer

Valuing private companies involves using various methods such as comparable company analysis, precedent transactions, and discounted cash flow analysis.

Comparable Company Analysis (CCA) - Comparing the financial metrics of the private company to similar public companies to determine a valuation.
Precedent Transactions - Analyzing the sale prices of similar private companies that have been acquired to estimate the value of the company.
Discounted Cash Flow (DCF) Analysis - Estimating the present value of the company's future cash flows by discounting them back to their current value.
Asset-Based Valuation - Calculating the value of the company based on its tangible and intangible assets.
Market Approach - Using market data and transactions of similar companies to determine the value of the private company.

How do you value private companies?

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