Valuation of PE (Lecture 10) 0.0 / 5 ? Business ManagementPEUniversityNone Created by: joshjones95Created on: 07-05-17 14:59 Ways of Valuing unrealised Investment Price of Recent Investment, DCF, Net Assets, Earnings Multiple, Industry Valuation Benchmark 1 of 10 What type of valuation would you use for Early Stage Companies? Price of Recent Investments 2 of 10 Why is Price of Recent Investments useful? Likely to have paid Fair Value for the investment 3 of 10 Advantages of PE Firms for Investors Return outperforms market, Diversification, Investment expertise of Manager, Invest in developing markets, Inside Information, Access to entrepreneurial talent 4 of 10 Disadvantages of PE firms for Investors Long-term/illiquid, Needs specialist expertise, Blind pool Investing, Fees paid to managers, Returns not superior after risk adjusted 5 of 10 Features of Quoted Markets Markets constantly re-evaluated and re-priced, Market keep adjusting for new info given 6 of 10 Ways of measuring PE returns Multiples, TVPI, Net assets, IRR, Gross versus net returns 7 of 10 Type of Multiples Total value multiple (TVPI), Distributed multiple (DPI), Residual value multiple (RVPI) 8 of 10 What does IRR take into account? Capital redemption, capital gains, income through fees and dividends. 9 of 10 How diversification can be achieved in PE Selection ability, More frequent vintage years 10 of 10
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