Private Equity Valuation Methodologies

Private Equity Valuation Methodologies

Gavin Ryan

25 years: Private equity & banking

Valuation is a core component of every investment transaction and private equity is no different in this respect. In this video, Gavin discusses the methods of valuing buyouts, and growth and venture investments.

Valuation is a core component of every investment transaction and private equity is no different in this respect. In this video, Gavin discusses the methods of valuing buyouts, and growth and venture investments.

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Private Equity Valuation Methodologies

10 mins 8 secs

Overview

Private equity investment is based upon a strategy which results in an exit from the investment after three to seven years and this will impact the valuation approach. The second reason the valuation approach of private equity will be specific is that in venture and growth, most of the companies may not be profitable or have positive cash flow at the time the investment is made, which makes valuation difficult using straightforward textbook methods. In buyouts on the other hand, there will most likely be cashflow, but the effect of a leveraged transaction may have to be taken into effect in the valuation.

Key learning objectives:

  • Valuing buyouts

  • Valuing growth and venture

  • Dealing with different financial instruments

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Summary
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Expert
Gavin Ryan

Gavin Ryan

Gavin Ryan has twenty years’ experience as a private equity fund manager. He has managed a $30m Advent International Affiliate Fund, a $200m Fund part of Soros Fund Management and a €2.5bn Green Energy Asset Manager. Before he was in investment banking with HSBC and Nomura. Gavin has an Engineering Degree from Cambridge and an MBA from McGill.

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