Valuing a private company raises challenges that listed-company valuation does not. Financial information is often limited, owners are rarely diversified, and shares cannot easily be sold.
In this session from his online valuation class, Prof Damodaran explains how those differences affect the inputs. He covers adjusting the cost of capital for undiversified owners, considering discounts for illiquidity, and recognising that the right value depends on why the valuation is being done, such as a sale to a private buyer, a private equity investment or an IPO.
This session is highly relevant to business owners, startup founders, family offices and private equity investors. These are the situations where an independent valuation adds the most value.