Question: When using the Comparable Companies ( Comps ) method to value a private company in the context of a majority buyout by a private equity
When using the Comparable Companies Comps method to value a private company in the context of a majority buyout by a private equity firm, which of the following statements is most accurate?
The Comps method values the entire company based on the current market valuation of comparable public companies, regardless of the ownership structure or control dynamics of the potential acquirer.
The Comps method applies a discount to the valuation multiples to reflect the reduced liquidity and marketability of the private company's shares compared to publicly traded securities
The Comps method adjusts the valuation multiples upward to account for the potential synergies and value creation opportunities that the private equity firm could realize through the leveraged buyout.
The Comps method applies a control premium to the valuation multiples to reflect the private equity firm's ability to exert control over the company's operations and strategic direction postacquisition.
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