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?
Trending Content
Career Resources
WSO Free Modeling Series - Now Open Through
April 30, 2024
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
+Bonus: Get 27 financial modeling templates in swipe file
+Bonus: Get 27 financial modeling templates in swipe file
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).
Thanks man.
Follow up question - where is a good place to relearn this stuff, aside from school?
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!
find companies in the same industry/market (public) with similar capital structures, preferably in a similar region.
Quia non libero fuga odit. Velit nihil commodi quod. Necessitatibus dolores facilis nisi molestiae deleniti aut. Voluptatum harum sunt autem adipisci error dignissimos. Quas doloremque consequatur reprehenderit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...