Valuation
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I'm trying to determine the valuation of a private firm. I have two questions regarding the role book value and the competence of its current management play in determining its valuation.
I also am trying to fully understand what role does using financial records for public firm of approximately the same size, plays in determining the valuation of the private firm. I've put together two questions to better explain. I would appreciate any advice on the matter. Your advice does not have to be overly lengthly in nature.
(1) When trying to decide what price to pay for a PRIVATE FIRM, what role does the book values of the PRIVATE FIRM play in its evaluation.
(2) What role does the current management who are considered not very competent play in the valuation of the PRIVATE FIRM
USING INFORMATION FROM A PUBLIC FIRM TO DETERMINE THE VALUATION OF A PRIVATE FIRM:
(3) What role does the price-to-earnings ratio for PUBLICLY traded firms play in the valuation of the private firm
(4) What role does the market value as a percentage of sales analysis for PUBLICLY traded firms play in the valuation of the private firm
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Valuation of a Private Firm Using Public Firm Fiancial Records
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(1) When trying to decide what price to pay for a PRIVATE FIRM, what role does the book values of the PRIVATE FIRM play in its evaluation.
Book values of a private firm can be used in calculating an offer price for acquiring a privately held firm. Investors use ratios such as price/book value to calculate fair valuation of a firm. "Price/book value is best applicable to companies that have many tangible assets, such as companies that possess factories and other production facilities." The main advantage of using price to book value is its simplicity and ease of understanding for the investor.
Reference: ...
Education
- BComm, University of Delhi
- Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
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