What's the EV on an All Equity, Private Company?
(Chimp, 3
Points)
on 11/2/11 at 7:07pm
Might be a dumb question but....
I know EV = market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents but what is the market cap. of an all equity, private company that doesn't have # of shares and price to those shares?
Thanks!
Use book value for a
Use book value for a distorted value or use multiples.
equity value + goodwill
equity value + goodwill
if you want the equity value
if you want the equity value (ie "market cap") of a private company you can work "backwards" so-to-speak. you typically apply a valuation multiple like ev/ebitda (from comps) to arrive at ev. from there you can add cash and net out debt to arrive to the equity value. if you want to arrive at the intrinsic value of the firm, then run a basic DCF. again, you'll arrive at ev (assuming you used unlevered free cash flow) and again make necessary adjustments to arrive to equity value. or, more directly, you can use levered free cash flow and then just "cost of equity" for your discount rate to arrive directly to the firms equity value.
hope that's helpful.
Capitalist
Awesome, thanks for all the
Awesome, thanks for all the input!