How do you value a watch company?
How do you value a Watch company like Richard Mille? All similar companies are privately held.
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Depends how much time you have. I could tick off a number of ways. If you think one of them is good you can go back four seconds.
I think it'd be very important to understand the time value of money for this
In all seriousness, isn't Richemont publicly traded? Did you even spend 2 minutes trying to do this yourself?
Comps analysis against public luxury accessories companies?
What luxury accessories company is trading public? They all seem to be held privately. Heck, even Rolex is held privately.
Wrong.
Richemont, which owns a bunch of luxury watch brands, is publicly traded.
Then you can look at Tiffany, LVMH, Prada Group, Kering...
Seriously, do you have a different Google than me or something?
Doesn't have to be watches in particular. The idea would be to find companies that have the same sales drivers (in this case a relatively similar demographic of the watch buyers). Maybe luxury companies that have significant revenue in their accessories line? You can probably source from S&P Global Luxury Index.
I just spoke with Marc Faber. He said he wouldn't pay much for Richard Miller's equity because there is an oversupply of luxury watches.
Interesting, are you working on a pitch idea or just doing some research?
A wealthy friend of mine is a huge fan of RM (he owns 8 of them) and wants to buy equity in the company. He asked me what to expect if he wanted to buy 5%-10% equity.
The same way you would value any company.
First, do you have their past financials? If not, it will be more difficult to build a DCF. Second, is any of the industry public? If not, were they involved in transactions?
If all of the above are not there, you of course could still value the firm. It will just take more leg work on your part. For example, to build the DCF you can estimate or find out what the size of the watch market is and project it out along with the market share the particular firm will have. Once you have the top-line, you will want to understand the inputs into making and selling the watches (the expenses) and try to come up with numbers for the FCF. As far as discount rates, this can be a judgement thing and will depend on many factors, but definitely still possible. As you can see - the less info you have, the more uncertainty there will be in the valuation.
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