How Investors Value Private Company Stock
Practical Influences  
(Slide 30  of 50)

• Other practical factors that influence valuation include:
  • Investment terms. The qualities of the security sold to the investor and the non-financial terms of the investment influence value. Convertible preferred securities are worth more than common stock because they provide the investor with preferences and the ability to convert into common stock. Liquidation preferences, registration rights, information rights and other terms favorable to an investor can remove issues that would otherwise depress the investor’s valuation.
  • Collateral. The availability of collateral or methods to make the investment more liquid can increase the price of company stock and make other fund raising methods available.

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