Important issues that one must consider in valuing young private firms include:
A) whether key people remain in the firm, the amount of dividends that one may receive in the coming years, and whether a controlling ownership interest or a minority interest is being valued.
B) the difficulty in valuing young, rapidly growing companies in contrast to mature, stable companies, the amount of dividends that one may receive in the coming years, and whether a controlling ownership interest or a minority interest is being valued.
C) the difficulty in valuing young, rapidly growing companies in contrast to mature, stable companies, whether key people remain in the firm, and whether a controlling ownership interest or a minority interest is being valued.
D) whether the key people remain in the firm, the pretax operating cash flows generated by the firm in the coming years, and whether a controlling ownership interest or a minority interest is being valued.

Question

Quizplus · Accepted Answer

Valuing young private firms is challenging, and important issues one must consider include the difficulty in valuing such firms compared to mature, stable companies. One must also consider whether key people remain in the firm since they are crucial for the firm's success. Additionally, whether a controlling ownership interest or a minority interest is being valued can influence the valuation. Therefore, option C is the best choice since it covers all these key considerations. Option A may also be relevant, but it misses out on the difficulty of valuing young companies. Option B is partly correct, but it overlooks the importance of key people in the company. Option D highlights the importance of cash flows, but it does not consider the other critical factors.

Important Issues That One Must Consider in Valuing Young Private