How do investment banks evaluate a private firm going public? Is it based on the assets owned by the company?

Dipish's picture
Rank: Senior Chimp | 17

Suppose a private firm(sole proprietor) has assets worth 50crs(zero Liability). Now I want expand my company by taking it public. I reach out to an investment Bank. Will the investment bank evaluate the worth of my company more than or less than 50 crs. And what will be the owner's share in the resulting public company?(It was 100% earlier)Am I missing something?Could anyone please explain this concept with an example?Thanks

Comments (18)

Aug 2, 2017

You would value a private firm the same way as a public firm, either with a relative valuation and / or an intrinsic valuation method

Aug 2, 2017

Suppose the valuation turns out to be 75 crores(in this case).Then stocks worth 75 crores will be issued?

Aug 2, 2017

No, you'd issue a public offering of however much you're raising, not the whole valuation of the company. The private company already has shares before it goes public; they just aren't on the public market.

Aug 2, 2017
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