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  • How To Value Initial Public Offering (IPOs) Companies


    Major Problem: One of the major problem in valuing IPOs is that the data about the firm is also not widely available and the Draft Red Herring Prospectus (DRHP) is the only source of information of finances of the company.

    Solution: Relative valuation using multiples such as P/E (adjusted for leverage, growth rates) and EV/EBITDA are most commonly used for valuing IPOs. To value an IPO, we start with an already listed company and take its trading multiple as base.Then, we make adjustments for information availability, phase in the product development, size and growth rates.


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    Prem-Profile-PhotoAbout the Author

    I am Prem, the founder of TheFinanceConcept. I am an Investment Advisor and a part-time blogger. I hold PG degree in MBA (Finance) and pursuing CFA. Blogging has become my passion from April 2011. I enjoy writing articles on Securities Analysis and Financial Planning.
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