Valuation of Equity Securities, Private Firms, and Startups

Abstract

For valuation of equity securities and similar objects research has not been rigorous and holistic. This paper is an attempt to review the literature on valuation of equity for a variety of types of entities, and within some important valuation contexts. The review was performed for such themes as (1) Valuation of Stocks (2) Valuation of Private Firms (3) Valuation of Startups (4) Valuation in Emerging Markets (5) Valuation and IPO. The review found that there is a consensus over various models for their usefulness and theoretical soundness, at the same time researchers and practitioner are seeking better models, particularly in the areas of private firm valuation and startups. The valuation of stock has more robust and recognized framework as compared to private firms and startups. The valuation of private firms is more complex because of closed nature of the firm. The valuation of startup is complicated because of the newness of the business and industry, and also because of the nature of the business structure. In general, the practices involving valuation of equity securities and other similar entities have evolved and improved over time. This research will enable the security analysts and other valuation experts to gain insights into various models and their inputs for their beneficial applications.