I've heard this question a lot and wanted to get a solid answer:
How would you find the risk factor of a private company (say a tech company) in detail.
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private companies don't have WACCs - not because they don't have a base of capital (both debt and equity) but because their equity is not traded publicly.
but, you can try to estimate what the company's WACC is going to be if it were publicly traded. this is done using comparables -> find other companies that are comparable to the company in question and calculate the unlevered beta.
then you would recalculated levered beta using the capital structure - you can get comapny's equity and debt amounts by asking owners/managers, etc.
i've never been asked this question in an interview and i don't think its asked too frequently.
valuations of private companies are done using comps
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