The Problem: Private Companies Have No Stock Price
Angel investors, small M&A advisors, and entrepreneurs face a unique challenge: how do you value a business that has no public shares trading on an exchange? Unlike public companies where you can just check P/E ratios on Yahoo Finance, private firms require a multi-method approach.
In this guide, I'll walk through four proven valuation methods you can use right now, plus a free Google Sheets template that does all the math for you.
Method 1: Discounted Cash Flow (DCF)
Project future free cash flows for 5-10 years, discount them back to today using WACC. The terminal value (often 60-80% of total value) uses the Gordon Growth Model.
Method 2: Transaction Comparables
Find 3-5 recent private company acquisitions in the same industry. Calculate median EV/Revenue and EV/EBITDA multiples. Apply to your target. This is the most defensible method in M&A negotiations.
Method 3: Asset-Based Valuation
For capital-intensive businesses (manufacturing, real estate), add up the fair market value of all assets and subtract liabilities. Think of it as 'what would this company fetch in liquidation?'
Method 4: Venture Capital Method
For early-stage/pre-revenue companies: estimate exit value, apply target IRR, work backward to post-money valuation. The classic VC approach from Stanford GSB.
The Template
I built a free Google Sheets template that combines all four methods into one dashboard. Input your assumptions once, see fair value ranges across all methods, weight them by confidence, and get a single recommended price.
Grab the free template here: https://microtoolsb2b.gumroad.com/l/privateco
No email required. Just make a copy and start using it today.
Built by MicroTools Studio — financial analysis tools for independent investors.
