A common interview question is "If you had a private and public company that were identical in all other ways, which one would you expect to sell for more?". Couldn't find the answer for this.
| +335 | Which Offer to Accept: UBS Analyst Role or Part Time Cashier at the Local Taco Bell | 42 | 4h |
| +276 | Roku-Fox Deal - UBS Misses Out on yet another deals after years chasing this deal | 30 | 10m |
| +264 | AI is insane | 34 | 3h |
| +252 | I Snuck Into UBS Office And Took A Shit On The Floor | 26 | 25m |
| +200 | Useless associates | 34 | 5h |
| +181 | Differences in Restructuring Teams? | 32 | 5h |
| +172 | GF is an IB Analyst at a top BB, hates it, what exit options does she have? | 28 | 17m |
| +165 | Centerview HC group falling off? | 25 | 3h |
| +154 | TPH V.S. Mizuho [HOU] | 24 | 5h |
| +149 | Shame on you Evercore - SA 28 | 40 | 41m |
Career Resources
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.
the public company would sell for more. private companies are discounted compared to public ones because they're more illiquid
Agree with Martha, and also consider that when acquiring public companies, one typically pays a control premium above market price, which would make valuations higher than if it were a private company.
Company Multiples? PRIVATE vs PUBLIC (Originally Posted: 03/18/2012)
Hello,
How would I solve this problem?
If I was doing an valuation exercise and I came across a firm with a EBITDA of $4.0 million and revenue of $30 million, a private firm. How should I find three public companies that would be suitable for an industry comparable when public companies haven revenue in the excess of $100 million. Would the public firm's revenues not matter? Also, how would I go about in my search for these industry comparable firms?
Any help would be appreciated!
What does the firm do? Find companies that do similar things and find small-(or in this case micro-)cap stocks that fit the bill. If all you have are large companies, you're not looking hard enough. Public firm's revenues matter, but mainly to serve as comparison for margin calculations (% of Rev). EBITDA is what you want (assuming it's a "vanilla" company that doesn't have specific cash-flow calcs like EBITDAX, EBITDAR, etc.)
Or, you can try to take a conglomerate that publishes divisional annual reports, and try to use their division's information as one potential comparable company. It's a bit tricky but good practice.
Begin with a trek through Google Finance, Yahoo! Finance. The list of companies below a stock page on GOOG finance has led me to companies I'm sure I would have never heard of otherwise.
Good luck. Hope this helps.
Quidem tempore totam fugiat fugiat voluptas consequuntur quasi consequatur. Sint accusamus veritatis sit id. Nostrum vitae enim error omnis vel qui qui. Aut ipsa tempore dignissimos dolorem nesciunt ullam ullam eaque. Beatae tempora quia recusandae necessitatibus.
Impedit aperiam sed iusto dolorem corporis qui. Est omnis corporis perferendis cum. Enim omnis ab ipsum cupiditate voluptas iusto.
Enim ipsum enim vitae officiis. Ullam et facere nulla qui aperiam assumenda. Autem saepe voluptas officia. Qui iste et mollitia molestias dignissimos.
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...