A comprehensive study of the market price of Canadian private and public firms

Abstract

Private companies represent a large percentage of the world’s businesses. Interestingly, most corporate finance research focuses on public companies. The only reason for this is that the wealth of information on public companies is considerably superior to that of private companies. The present study contributes to the body of knowledge about private companies by finding a model that is able to explain what is the fair price of a Canadian private firm. To put the private firm pricing model in perspective, this Project also determines a model that calculates the price of Canadian public firms. The models are easy to use by professionals of the corporate finance world, so that some selected variables are able to explain as much of the variation in prices as possible. The models are also used to extract valuable information for practitioners, i.e. owners of private firms, private equity firms, speculative investors and owners of public companies who want to acquire the portfolio of a private firm.