Valuation of Private Company Shares
The need for valuation of price of shares in private limited company often arise in the following situations:
Difficulty of valuation of private company shares
The valuation is made difficult as there is little published data available relating to private company shares. Unlike the value of shares of listed company, there is no open market price for private company shares.
The books and records of the private company are confidential to the shareholders concerned. Minority shareholders generally have limited access to unpublished information and no guarantee of board of directors representation.
This means that valuation of shares in private companies is not a precise science. There can be multiple valuation methodologies and factors to consider which will affect the outcome of the valuation of private company shares.
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