The following information relates to valuing private companies:

Aswath Damodaran, associate professor of finance at the Stern School of Business at New York University, provides a slide presentation on "Private Company Valuation," which requires Adobe Acrobat software to read and download.

The presentation discusses the cost of equity, the cost of debt, estimating the cost of capital, estimating cash flows, and shows how to translate cash flows into value. Other topics covered include the illiquidity discount, the effects of control and valuing control. He uses the New York Yankees baseball team and InfoSoft, a private software firm, as examples. Finally, he provides a case study on Estee Lauder.

FEI Research Foundation Products:

• Harvesting Investments in Private Companies, May 1999
• Spin-Offs and Equity Carve-Outs: Achieving Faster Growth and Better Performance, February 1999