What do you use for discount rate when a company’s isn’t known?

What do you use for a discount rate when the company's discount rate isn't published and the financials to figure it out aren't either?

Comments (5)

Jul 28, 2021 - 7:19pm
ZetteMM, what's your opinion? Comment below:

Is this a private company?

Simplest way would be to look at equity research reports for listed companies that operates in the same industry and is as similar to it as possible (end clients, products, size - though probably less likely), and see what discount rate they use in the valuation section. It is sometimes given.  

Financing structure will impact this, and a premium may need to be added (which will increase the discount rate for your company).

Jul 30, 2021 - 7:19am
ZetteMM, what's your opinion? Comment below:

I think Corporate Finance Institute (CFI) is good, as are the WSO and Wall Street Prep courses - CFI in particular has quite a lot of free stuff online.

Otherwise Udemy has some cheaper (under $60) courses on valuation and modelling from what I recall.

I try and avoid the overly academic stuff!

Jul 30, 2021 - 9:25am
FJ80JA, what's your opinion? Comment below:

find companies in the same industry/market (public) with similar capital structures, preferably in a similar region. 

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Aug 2, 2021 - 6:45pm
alfwamp, what's your opinion? Comment below:

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