Non-listed Companies Valuation

Public company and private firm exist in different circumstances, one in security market while the other not. Such a situation generates a substantial difference in each evaluation. Generally speaking, public company evaluation can apply research outcomes of mainstream of Finance. Very few scholars study private firm evaluation. So there are few outcomes that are applicable. But in the very beginning of merger and acquisition, it has a deep connection with private firm. Let's see through the economic history since the Industrial Revolution, we should find that private firm deeply affected the economic developing. Nowadays, accompanied with the thrive of new economy, more and more public companies such as IBM, Intel realize the glittering perspective of new economy and then choose to buy those private network firms. The scale of recent M&A happened in U.S are between $25 million and 40 million. Private firm and one sector of public company become the shinning star in M&A market. In China, there are so many private firms, so it is very important to study private firm evaluation.This article begins from the evaluation of public company. We review the evaluation methods of public company. Then we compare the characters of private firm and public company evaluation. Then we adjust those public company evaluation methods to apply them to private firm.This thesis is divided into six parts, the structure and main points are as follows,Part 1: Introduction. We introduce the background of the topic and current research outcomes on it. Then we come up with definitions of Fair Value and Investment Value. In the end we discuss classification of evaluation methods.