alleryStart learning →A private firm valued using listed-peer multiples is usually adjusted for what?
ALack of marketability
BExcess dividends
CHigher liquidity
DCurrency translation
Answer & Solution
Correct answer: A. Lack of marketability
Private company stock is harder to sell, so a discount for lack of marketability reduces the value implied by public peers.
Keep practising Business Valuation
Browse all Business Valuation questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
How is marketability of a business interest defined?A controlling interest is defined as an investor acquiring more than what share of a compaWhich level of value is lowest for equity interests in a private firm?A buyer pays a 100% control premium over the minority price. What is the implied minority In the guideline public company method, the comparison with listed firms is expressed as wWhy is the asset-based approach weak for a going concern?Why do some critics doubt the objectivity of the WACC method?A WACC-based discount rate is applied to which cash flows?