Principles of Private Firm Valuation

The entrepreneurial explosion in the United States over the last thirty years has resulted in a record number of established private businesses. If you're a financial professional serving these private firms—as a CPA, valuation analyst, or even CFO—you've probably been called upon to give advice on issues such as firm valuation, deal structure, and related business transition planning. Whether you're looking to use valuation in preparation for a private firm transaction or strictly for tax-related reasons, you need a solid understanding of how private firm valuation works.

Written by valuation expert Stanley Feldman, Principles of Private Firm Valuation integrates academic research results with on-the-ground experience, in order to provide more disciplined guidance on how you should address several of the most important—and largely unresolved—issues in the arena of private firm valuation. Filled with in-depth insights and practical advice, this comprehensive resource offers an executive education on important valuation issues, including:

• Assessing which valuation method is most accurate—discounted free cash flow or the method of multiples
• Estimating the size of the marketability discount
• Estimating the value of control and its implication for valuing minority interests in a private firm
• The influence of taxes on firm value, specifically whether S corporations are worth more than equivalent C corporations
• How best to estimate a private firm's cost of capital—with a focus on the adjusted version of the CAPM, known as the build-up method

From introducing a framework designed to measure the value benefits of various strategic initiatives to outlining the valuation implications of FAS 141 (Accounting for Business Combinations) and FAS 142 (Accounting for Goodwill and Other Intangible Assets), Principles of Private Firm Valuation covers some of today's most important valuation issues.

Weaving recent academic research with real-world case studies, this unique guide offers the most up-to-date tools and techniques needed to properly perform private firm valuation.