Aswath Damodaran Session 20: Private Company Valuation

In today’s class, we completed the last few strands of sum of the parts valuation (not pricing) and then started on the discussion of private companies. After laying down the base principle, which is that the fundamentals that drive private company value are the same that drive public companies, we began looking at why motive matters with private company valuation, since the same business can be worth different amounts to different buyers. In terms of specifics, we looked at the challenges of undiversified buyers, illiquidity and key person effects in private-to-private transactions and how they all go away when the buyer is a public company. Next session, we will start on valuing/pricing IPOs and then move on to real options.
Start of the class test: http://www.stern.nyu.edu/~adamodar/pd…
Slides: http://www.stern.nyu.edu/~adamodar/po…
Post class test: http://www.stern.nyu.edu/~adamodar/pd…
Post class test solution: http://www.stern.nyu.edu/~adamodar/pd…