Valuing Private Company: Keshav Sinha Is Interested in Investing in a Private

question 8

Multiple Choice

Valuing private company: Keshav Sinha is interested in investing in a private company. Based on earnings multiples of similar publicly traded firms, he estimates the value of the private company's stock to be $21.27 per share. He plans to acquire a majority of the shares in the company. The expected control premium is 10 percent. Keshav estimates the marketability discount for such a firm to be 12 percent. The discount for the key person, one of the founders who may leave the firm upon Keshav's control of the firm, is 20 percent. What price should he be willing to pay for these shares?

• A) $16.47
• B) $31.45
• C) $15.72
• D) $32.94

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Having a natural inclination or tendency to something, or positioned face downward.

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Open sores that can form on the lining of the stomach, small intestine, or esophagus, often resulting from an infection or prolonged irritation.