How accurately does privateMetrics® predict transaction/asset prices?

Answer

privateMetrics® factor models can predict transaction prices in-sample with zero errors on average. More importantly, even at the level of PECCS segments, e.g., each activity class, each revenue model class, etc., our approach can predict transaction prices with very small errors on average.

For example, the mean errors in log (P/S) and P/S ratios in 5,438 private market transactions between 1999 and 2022, are about 0.0006 and 1.1%, respectively.

Even across the 24 PECCS segments, the average errors are very small. The average of the mean segment errors in log (P/S) and P/S ratios are 0.0006 and 1.5%, respectively.