Valuing private company: You are interested in investing in a private company. Based on earnings multiples of similar publicly traded companies, you estimate the value of the private company's shares to be $13.44 per share. You plan to acquire a majority of the shares in the company. The expected control premium is 12 per cent, while the marketability discount for such a company is 15 per cent. The discount for the key person, one of the founders who may leave the company upon your control of the company, is 15 per cent. What price should you be willing to pay for these shares?

Question

Quizplus · Accepted Answer

The Answer of Valuing private company: You are interested in investing in a private company. Based on earnings multiples of similar publicly traded companies, you estimate the value of the private company's shares to be $13.44 per share. You plan to acquire a majority of the shares in the company. The expected control premium is 12 per cent, while the marketability discount for such a company is 15 per cent. The discount for the key person, one of the founders who may leave the company upon your control of the company, is 15 per cent. What price should you be willing to pay for these shares?

Valuing Private Company: You Are Interested in Investing in a Private