Valuing Pre-IPO Companies
For valuations of the common stock of early stage companies, analysts usually review prior rounds of financing, typically of convertible preferred stock. However, the value of the common stock must be discounted from the preferred stock values, since preferred stock normally has liquidation preferences, along with other rights and privileges.

Valuations of pre-IPO companies should also be made with reference to the pending public offering, which typically would boost the value of the stock. However, not every initial public offering succeeds and no one can predict with certainty the future price at which the stock will be issued to the public. This uncertainty must be taken into account when applying a discount.

For more information on our valuations of early stage and pre-IPO companies, contact Pluris today.