Trusted Private Company Valuation in San Diego, CA
Valuation of private companies involves complex methods and procedures of appraising the current net worth of a private entity. Unlike a public company’s valuation, which is straightforward, a private company has some challenges when carrying out its valuation. Private companies are not obligated by law to publicly declare their financial status, and their shares are not available for trade in the stock market. Private companies accounting standards are less stringent, unstandardized, and have no metrics to determine the value of their stock, making it difficult to compare them with other similar companies. However, Wiley Financial in San Diego solves these challenges by separating the intermingling personal and business finances in a family-owned private entity. A Certified Financial Analyst (CFA) uses the fundamental approach to determine the financial status of a private company. These approaches include; cost approach that entails asset-based valuation, an income approach that presents the current value of an entity, and a market approach that employs multiplier designations.
Methods of Private Company Valuation
Comparable Company Analysis (CCA)
The comparable company analysis assumes that similar companies in the same market industry have the same multiples. When conducting the valuation of private companies without sufficient financial information, financial data from a similar company is calculated using comparable multiples. When using this method, for instance, in San Diego, the private target company features such as the industry, size, and operation are identified before establishing other companies with similar characteristics in the region. After collecting these companies’ financial and fiscal information, the market industry average is calculated. Because these firms are always at different growth stages, their valuation is computed through the EBITDA multiple. The EBITDA refers to a company’s net income after the taxes have been adjusted, taxes, depreciation, and amortization. EBITDA is used to measure the target company’s cash flow approximately. A company’s valuation is achieved by using the following formula:
Value of the target company = Multiple (M) x EBITDA of the target company
Discounted Cash Flow (DCF)
Discounted cash flow method takes some features of comparative company analysis and takes it a notch higher. Unlike in the CCA formula, where a company’s cash flow is estimated using financial multiples from similar companies, DCF valuation starts by determining the financial growth rate of the target company. The revenue growth rate of a target company is determined by calculating the growth rates of similar companies in the market industry. For instance, when Wily Financial is performing DCF, it considers the company’s revenue projections, taxes, and operating expenses to generate the free cash flow of the target company. The weighted average cost of capital (WACC) is calculated using the company’s cost of debt and equity, tax rate, and capital structure. WACC is important when finding out the appropriate discount rate. Valuation of private companies using the DCF method requires complex financial modeling. Wiley Financial has extensive financial modeling experience, having performed valuations to many companies in different industries around San Diego.
First Chicago
The First Chicago method employs the formulas from both discounted flow and multiple-based valuation methods. The only distinct difference when performing valuation using the First Chicago method is considering a target company’s payoffs. Three scenarios are used when performing private company valuation using the first Chicago method, i.e., a base case which is indicated in the company’s business plan, a base case which is an indication of a company’s likely scenarios, and a worst-case which project the likely event of a company’s worst scenario. These scenarios are normally used when projecting the growth rates and case-specific cash flows in comparable company analysis and discounted cash flow method. Valuation of a target company is arrived at after taking the three scenarios probability-weighted average. The First Chicago method valuation is a common method used by private equity investors and venture capitalists because it provides company valuation with detailed information of the potential upside or downside risk. It is important to note that the valuations of private firms are based on estimation and market assumptions. While the growth rates and average industry estimate a company’s financial projections, it does not apply to one-time extreme conditions. Wily Financial provides a reliable valuation of private companies by incorporating complex transactions in San Diego using information from IPOs, mergers, and acquisitions.
Understand Your Business Value With Precision
At Wiley Financial, we specialize in private company valuation in San Diego, CA, helping owners gain a clear and defensible understanding of their business’s worth. Unlike public companies, privately held companies don’t have publicly traded shares or standardized reporting, which can make assessing value complex. We combine rigorous financial analysis with personalized attention to provide insights that empower strategic decision-making.
Our private business valuation services are tailored to each client. We work directly with you to examine your financial statements, operational data, and market trends. This approach ensures that every report is both accurate and relevant to your unique business situation. Whether you’re preparing for an exit, planning for succession, or navigating legal disputes, our valuation of privately held companies gives you the confidence to make informed decisions.
Our Methods Deliver Clarity and Reliability
We employ multiple methodologies to assess private company value. Comparable Company Analysis (CCA) examines similar businesses in your industry to determine market-based benchmarks. The Discounted Cash Flow (DCF) method evaluates your company’s projected cash flows, incorporating revenue growth, operating expenses, and cost of capital to arrive at a present value. For complex scenarios, we also apply the First Chicago method, which uses multiple scenarios to quantify upside and downside risk.
In every engagement, we combine these approaches with our extensive experience in San Diego’s diverse business landscape. Our team ensures that every valuation is defensible, whether it’s used for mergers and acquisitions, litigation, or internal strategic planning. In addition to private company valuation, we provide comprehensive business valuation services in San Diego, CA, including appraisals and industry-specific reports.
Why Choose Wiley Financial
We bring boutique precision with big-firm rigor. You work directly with certified professionals who understand your industry and the local market. Our valuations are meticulously prepared, reviewed, and backed by industry-recognized credentials. We also maintain clear communication throughout the process, so you’re never left wondering about next steps. Our goal is to provide actionable insights that help you protect your business, optimize decisions, and plan with confidence. Take the next step in understanding your company’s true value. Contact us today to schedule a private business valuation in San Diego, CA, and receive a thorough, defensible report you can trust.
Frequently Asked Questions
Private companies lack publicly traded shares and standardized financial disclosures, which makes valuation less straightforward. We use specialized methods to assess value accurately.
Valuations are critical for exit planning, mergers and acquisitions, litigation, succession planning, or fundraising to provide a credible estimate of your company’s worth.
Yes. Our reports follow industry-recognized standards and can withstand scrutiny in legal, tax, and financial settings.
Timing varies depending on the complexity of your business. Typically, engagements are completed within a few weeks, with clear updates provided throughout.
Absolutely. Our methods account for projected cash flows, growth potential, and market comparisons to provide reliable valuations for startups and growth companies.
Wiley Financial Services is a full-service accounting firm, specializing in Business Appraisals and Business Valuations, that has over 20 years of experience with a variety of industries ranging from restaurant, biomedical, manufacturing, advisory firms, nurseries, event design firms, IT firms, and many more. Wiley Financial is based in Oceanside, CA and we primarily service clients across the Western United States from our San Diego office.