facebookQuestion: How do people do DCF valuations for Private Equity Firms, or is there a different method for valuations? - Seedly

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Anonymous

16 Feb 2020

βˆ™

General Investing

Question: How do people do DCF valuations for Private Equity Firms, or is there a different method for valuations?

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Isaac Chan

05 Apr 2019

Business at NUS

Sorry I don't understand the question, you mean how to perform valuation for a Private Equity firms, or how does a PE firm do valuation?

I don't have much experience here in this field, since I've only done internships in a PE and corp fin firm.

I don't think people in PE firms will do valuations very differently from M&A, buy / sell side or other players in the corporate finance sector. Some firms may use a standard risk-free rate or risk premium or certain assumptions when it comes to valuation across their different deals for proper standardisation. Bigger banks and big 4 firms also have Debt Capital Markets, Equity Capital Markets specialist and other functions which may specialise in getting your discount rate.

I think typically PE firms perform more of LBO analysis to see if an expected IRR can be reached. How they perform precedents transaction analyses may be different depending on whether the PE firm is merely a strategic acquirer attempting to look at harnessing synergies or not.

Maybe this article will be helpful (https://www.financierworldwide.com/valuation-ch...)

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