Thanks. We aren’t looking for a valuation number to sell. Just attempting to figure out what DS’s business stake is worth as an overall % of our portfolio / net worth. I agree that we can’t use any future PE sale since we have no clue if that would happen or what the final sales amount would be. Thanks for confirming that we should scratch #3.I think your desire to track the value (with any degree of accuracy or certainty) might be unrealistic.
Private companies can go through all sorts of changes in valuations, depending on who's doing the evaluating, and when. Skeptics or pessimists will view the company differently than an insider who might have optimistic feelings about the business.
My approach would be to establish a very wide range of possible values. If/when an offer comes in after 3-4 years, you'll have your answer.
Regards,
Correct me, but this should be treated the same as real estate, right? E.g., property value and ROI from rent (for landlords). My thought is there are 2 similar line items: (#1) valuation and (#2) buy in & draw.
#1 Valuation — use an industry standard like EBITA as the estimated valuation metric. I know there are plenty of arguments for/against EBITA, but we can at least logically explain the rationale for using it. Within the portfolio, this tracks the proportion of DS’s ownership stake as part of the overall performance of the business.
#2 Buy in & Draw — I view the buy in no different than investing in a different asset like RE or the stock market. We purchased a % of the business and expect a return. Within the portfolio, this tracks the cash invested in the business and the total annualized draw is the return.
Help me poke holes in my approach. Thanks!
Statistics: Posted by bjc3 — Sat Jul 06, 2024 12:50 am — Replies 2 — Views 301
