Session 23 (Val Undergrad): Private Company & IPO Valuation

In this session, we started by looking at the challenges of valuing private-to-private transactions, where the buyer of a private business is undiversified and cares deeply about illiquidity, and how the values are depressed as a consequence. We then drew a contrast to the same company being valued by a public company, and argued that this should lead to private businesses increasingly become parts of public companies or going public themselves. In the final section of the class, we looked at valuing/pricing IPOs, and how to deal with offer proceeds from the IPO and the IPO process itself. In the next session, after the quiz, we will start our discussion of real options, requiring you to download and bring packet 3 with you.

[zacharysmith]

professor, Would love some input on how to value WINA besides with a DCF. Given they are royalties based business/ holding company, with no tangible assets and negative equity (buy back shares) and book value, we find it extremely difficult to justify its valuation or use another method like residual income. How do you value the underlying intangible assets (trademarks)? Or do you just conclude its expensive now but over time given a its value will be eroded away? - thanks!

[Akerfeldt]

I wonder if Chamath ever tweeted about this...

[punkyhippo]

Hi professor, the link to the slides appears broken.