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1. What are the potential shortfalls of using comparable to value a private company? 2. How does...

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Finance

1. What are the potential shortfalls of using comparable tovalue a private company?

2. How does the concept of fiduciary duty play into the use ofpreferred stock?

3. Why is vesting used in venture capital deals? Why domanagements agree to it?

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1 For a private company the potential shortfalls of using comparable for valuation purpose starts with the shortfall that market multiples can diverge strongly from the investment value Secondly the shortfall for using comparable in case of private company is that in case the overall industry is undervalued or overvalued in the opposite case then it will not be    See Answer
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1. What are the potential shortfalls of using comparable tovalue a private company?2. How does the concept of fiduciary duty play into the use ofpreferred stock?3. Why is vesting used in venture capital deals? Why domanagements agree to it?

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