How should I best determine the equity weighting (E/E+D) for a private company's WACC calculation? This isn't a startup but a 10 year old private company, that has a capital structure which is unlikely to change. Is it best practice to use the book value of equity shown in the balance sheet. Or should I determine the median E/D+E weighting from listed comps, albeit this private company has a different cap structure? Or is there another, better, option? Thank you
Trending Content - Investment Banking Forum
| +267 | Why UBS Is the Worst Place to Start Your IB Career | 40 | 2d |
| +219 | UBS 2nd Year Analyst Q&A (2026) | 41 | 1d |
| +113 | UBS IB 26Q2 a Disaster! Advisory Revenue Down 23%, Capital MarketsDown 5% | 16 | 54m |
| +102 | What's your craziest "hardo" story? | 18 | 9h |
| +53 | Wolf of Wall Street vs. Reality: Anyone else feel scammed by the movies? | 19 | 23h |
| +50 | Suspended for a Year | 21 | 1d |
| +49 | Elite Boutique interview questions | 17 | 2d |
| +41 | Downfall of Qatalyst | 13 | 2h |
| +40 | Lincoln International Return Offers | 9 | 7h |
| +39 | so confused about 28 SA timeline | 30 | 19h |
Career Resources
I would go with using comps to get EV
You start with using an market average gearing to get to a valuation. From there you indeed plug the real equity value (based on target leverage - could well be lower than market average because of owner's preferences) into the formula with which you create a circular reference that you let excel solve a few times.
Highly debated topic however, probably many opinions on this. But everybody will agree you should never use book value.
Thank you very much
Nobis explicabo exercitationem praesentium pariatur facilis incidunt. Commodi et et aut neque.
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...