Provide a reason why a privately-held firm is valued higher/lower than comparable publicly-held firms. To get...

Provide a reason why a privately-held firm is valued higher/lower than comparable publicly-held firms. To get the full mark, you must discuss both cases.

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Expert Solution

Privately held form are valued higher then the publicly held company because if they are successful in nature, their value will always be magnified because they are not be listed company and their informations are not in public domain, because it is not needed in the public disclosure, so their value should always be estimated by various analyst and high rate of valuation is provided to them because their books are not public.

when the privately-held firm is not performing good, and they are facing with the debt crunch, their values on the downside will be excessively magnified and it will lead to a lower valuation for this company because trouble for this company will be higher as their valuation will be low

It can also be said that this publicly held company are always valued irrational, because their books are not public, so on the way upside there will be overvalued, and on the way down side there will be undervalued.

jeff jeffy answered 1 year ago

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