The valuation of a high growth business is a key concern for the owners of the enterprise as well as outsiders such as prospective investors. As an example, a corporate buyer that plans to acquire the business has to figure out how much the entire company is worth. The same is true of a savvy investor in the stock market who wants to buy a block of shares in a listed firm.
A simple way to gauge the value of a business is to compare it to similar firms in the marketplace. The matchup against listed firms is of course directly relevant in the case of a public offering of shares. However, the same analysis can serve as a point of reference in other settings. An example of the latter occurs if the owners decide to sell the company, whether in whole or in part, by way of a private transaction.
More on Valuation of a High Growth Business.
* * *
