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1.4.1 Universe determination

First, determining the universe follows the below criteria:

  1. The company should not be dissolved, liquidated, or declared bankrupt at the time of consideration.

  2. Is operated or headquartered in one of the countries of interest expressed before (i.e., one of the 52 countries). Country consideration is only for Companies to be included as part of the privateMetrics indices. For valuation analytics, no country filters are used.

  3. Is a for-profit private company with a capital structure that does not have any security (equity or bond) traded publicly at the time of consideration.

  4. It should not be a fully owned subsidiary or majority-controlled subsidiary of a publicly listed company, directly or indirectly. If it is a subsidiary of another private company, only the parent is eligible for inclusion provided their financial information is available.

  5. Is not entirely government-owned or controlled.

  6. Has non-negative sales with the average sales in the past being over USD 1 million and at least two fiscal years of financial accounting data that is accessible.

  7. Has a business and activity description.

  8. Exclude companies that are specifically available to be included in the infrastructure indices of inframetrics.

Beyond these filters, we also exclude outliers in terms of size, growth, leverage, and employee base, as these are less likely to be part of PE holdings or transactions.

Finally, to ensure that our Universe is like PE-owned companies, we examine the distribution of the valuation of private companies in our transaction universe. Specifically, we examine the distribution of Price and log (Price). The distribution of log (Price) exhibits a Gaussian-like distribution (truncated at the left due to our minimum deal size for consideration), in contrast to price, which is distributed in an exponentially decaying manner. Using the log(Price) distribution, we obtain the mean and standard deviation and construct a confidence interval of 99.99%.

We include all the companies that fall within this confidence interval for being eligible to be included as part of our indices & benchmarks, approximately translating to a range between $ 20 million and $ 21 billion, respectively, at the lower and upper ends of the distribution.

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