What model does privateMetrics® use to estimate asset prices?
Answer
privateMetrics uses a factor model approach to estimate asset prices. The factor models are calibrated with actual arm’s length transactions of equity stakes in private companies. Our factor models can accommodate time-varying factor prices, thus simulating closely the price formation behavior in private markets. For example, a company with the same characteristics can be estimated at a higher valuation, after a similar company is taken private in an expensive transaction, and vice versa.
Further Reading
You can read more about our modelling in our Private Equity valuation white paper and on dedicated Private Equity Asset Pricing Approach pages.