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I think he meant the ability to have higher valuation, which often is cited as a multiple of revenue, EBIDTA, etc. For instance, a publicly traded company will
by browser411 18y ago
I think he meant the ability to have higher valuation, which often is cited as a multiple of revenue, EBIDTA, etc. For instance, a publicly traded company will tend to have a higher valuation than a private one b/c it is more liquid and stockholders can cash out on some stock exchange at any time.
- jond2062 18y agoYou hit the nail on the head. When valuing a privately held company, an investor will almost always apply a discount for lack of marketability because unlike 100 shares of stock in say IBM, for example, an investor doesn't have an easily available market to quickly sell their shares in a private company.