The Private Company Discount : An acquisition study of public and private companies on the Swedish market

Sammanfattning

The difference in valuation between private and public firms have been studied several times on the U.S. and European markets. However, we believe that the lack of studies made on the Swedish market opened a possibility for an exciting opportunity. The general conclusion drawn from the earlier studies is that there in fact does exist a discount on private companies compared to similar publicly traded ones and this study is going to examine whether this also applies on the Swedish market. After collecting data from acquisitions of private and public firms, each private firm is paired up with its closest public counterpart and the multiples are being compared. This resulted in a mean discount for private companies of 48%, 32% and 32% when comparing the EV/EBITDA, EV/Sales, and EV/Earnings multiples respectively confirming the existence of a Private Company Discount on the Swedish market.