how to find beta for a private company with no public comparables> got this question from my interview yesterday.
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Could do a quick bit of background research to see what any other similar private companies had listed as their beta (if your firm had valued them), or find the closest possible public company and make risk adjustments, or you could regress their historic earnings against market performance and use the beta from that. Realistically you'd just use one from a related industry.
afroman23
i agree. he didnt want me to use any comparable method 'regress their historic earnings against market performance and use the beta from that" i said same thing during my interview, but only given its a long-established company. but still he is looking for something else.
i agree. he didnt want me to use any comparable method 'regress their historic earnings against market performance and use the beta from that" i said same thing during my interview, but only given its a long-established company. but still he is looking for something else.
You could loosen the comps. (I mean what company has NO comparables?) You could use an industry beta (conceptually similar to the above). You could use a beta of 1 or 1.5 or whatever you choose and then add specific premiums to reflect the risk (or saftey) of the company.
Check out damodoran. He wrote a white paper on Betas for private companies.
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