Valuation of the Private Firm

This course is for entrepreneurs and venture financiers who desire to learn how non-public firms are valued. The course consists of lectures, in-class presentations by guest experts, in-class presentations by students, written examinations, team projects, and various assigned readings. Lectures will cover a review of financial theory and analytical techniques as they relate to valuation, a review of the various types of valuations mandated by law, and circumstance and the identification of the appropriate valuation techniques to apply in each circumstance. Students will be required to develop an understanding of the importance of the firm?s qualitative characteristics and the contribution qualitative firm characteristics make to firm value such as: (1) firm strategy; (2) firm management; (3) the firm?s product and/or technology; and (4) the firm?s ability to execute on its strategy. Students will prepare a team generated valuation report and will learn how to value a firm by observing and valuing different relevant components of value. These components are: (1) the value of free cash flow (i.e., the value of an on going operating business); (2) the value of any control discounts or premiums; (3) the magnitude of any marketability or size discounts; and (4) the value of intellectual property or technology. Overall, the student should become more competent in using financial techniques to analyze a firm?s value and the student should develop a strong sense as to how qualitative aspects of a firm?s operation and performance can and should be considered when assessing firm value.

This course is not offered every trimester.

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