How Investors Value Private Company
(Slide 28 of 50)
- An almost infinite variety of methods can be
used to value a company.
- The classical definition of fair market value
– what a willing buyer will pay a willing seller – offers
little practical guidance to companies raising capital.
- The most common valuation methods are the
market price method and the discounted flow method. Many think
these methods provide the best and fairest valuation method for
companies expecting dramatic growth.
- Both methods estimate present value based on
projections of a company’s future performance. Neither is
- A full discussion of both pricing methods can
be found under the Pricing and Discounted Cash Flow
entries in the Growth Company Guide.
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