Private Business Valuation: Introduction

This chapter describes the fundamental concepts underlying private business valuation. It covers the three major private valuation concepts that are: (1) Private investor expectations drive private valuation (2) Private business valuation can be viewed through value worlds and (3) Private valuation is a range concept. An underlying principle of all valuation is that risk is related to market rates on capital. The greater the perceived risk of owning an investment, the greater is the return expected by investors to compensate for the risk. This chapter also illustrates the triangulation for valuation through various examples.