Enhancing Market Value Estimation for Privately Held Companies: Differentiated Multipliers in the Czech Brewing Industry

Michal Drábek and Pavel Syrovátka
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Michal Drábek: Mendel University in Brno, Czech Republic
Pavel Syrovátka: Mendel University in Brno, Czech Republic

European Journal of Business Science and Technology, 2024, vol. 10, issue 1, 25-46

Abstract: The paper focuses on valuation multipliers for privately held companies, with the aim of developing and applying a methodological procedure to improve the accuracy of estimating the market value. This improvement is achieved through the differentiation of an industry multiplier using financial decomposition. We applied the proposed methodology enhancements to a dataset comprising 50 Czech breweries, estimating their market value using the discounted cash flow method. Importantly, our proposed modification to the methodology is not limited to this sample of breweries; its nature makes it a generally applicable procedure. Our results demonstrate that the application of our proposed procedure significantly enhances the accuracy of market value estimation for privately held companies, yielding an increase of 40-50% compared to the use of the median value.

Keywords: privately held company; valuation; industry multiplier; differentiated multipliers; Czech breweries valuation (search for similar items in EconPapers)
JEL-codes: G12 G32 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:men:journl:v:10:y:2024:i:1:p:25-46

DOI: 10.11118/ejobsat.2024.002

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