This note covers several commonly used methods of the value of early stage companies, and discusses some of the problems and difficulties in assessing the overall private assets. The key assumptions underlying the venture capital and discounted cash flow valuation techniques are discussed in detail. In addition, the note attempts to provide some direction in making the appropriate trade-off between the guidance of financial theory and practical constraints associated with the illiquid asset class. Numerical example to highlight the main differences between the methods.
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by Susan Chaplinsky Source: Darden School of Business 14 pages. Publication Date: June 8, 2005. Prod. #: UV1363-PDF-ENG
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