Sorry if this question sounds really basic, but I haven't had many finance classes yet.
For a private company, who hasn't produced any financial statements or doesn't have any published financial data/statements, how could one go about projecting their future cash flows?
I would think to use cash flow projections from comparable companies, but this is just guess.
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as far as i know, the best way would be to get whatever data you can (sales, EBITDA ect.) and make your valuation based on comps. It is less data intensive so you wont need full statments.
I'm not sure if that is the best way, but thats how i would do it.
It'd be tough I'd think without any data. If you can get the current years, and apply a reasonable growth rate (comparable with another firm) and get to EBIT that way.
Not sure though
This is exactly the question that venture capitalists are experts in dealing with. When you have a brand new company, that company will most often have negative profits and negative FCF. So, how can we do a DCF? The answer: We can't. Instead the company is most often valued as a multiple of EBITDA.
Now, if you are talking about valuing a company without conducting any due diligence (access to financial statements), about the only realistic valuation tool is precedent transaction comps. However, even this is a very hard analysis to conduct because there are very few (if any) good resources for finding precedent transaction information of privately held companies. Attempting to use public companies or large private companies as comps for a small private company is erroneous because there are huge risk premiums attached to smaller companies that would make these large comps nearly worthless.
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