Explanation:
Senior management owning a controlling interest in the company (60% ownership) would most likely have a positive effect on private company valuation because:
Limited financial disclosures (Option A) typically decrease valuation due to higher information risk and uncertainty
Share sale restrictions (Option C) typically decrease valuation due to reduced liquidity and higher required returns
Therefore, option B is the correct answer.
Ultimate access to all questions.
An analyst identifies the following characteristics that make a private company different from public companies:
Which characteristic would most likely have a positive effect on the private company valuation?
A
Limited financial statement disclosures
B
Senior management owning a controlling interest in the company
C
A shareholder agreement that restricts the shareholders' ability to sell shares
No comments yet.