Valuation of private companies by Estonian private equity and venture capitalists

摘要

Purpose – The paper aims to investigate the views of Estonian private equity and venture capitalists about the valuation of high-growth companies and compare these with theoretical recommendations found in corporate finance and venture capital literature. Design/methodology/approach – The analysis was carried out by using the case study methodology. Structured interviews were conducted in order to present the material for analysis. The dominant model of the case study analysis is exploratory, using an explanation-building and pattern-matching technique. Findings – Main findings of the empirical study show that Estonian private equity and venture capitalists make the valuation somewhat differently compared to Western European and American ones. Some findings do not confirm the suggestions made by scientists. Research limitations/implications – Some of the required data were considered to be a business secret. The research could be extended to a broader sample. Practical implications – The findings can be used by the managers of private equity and venture capital funds for choosing appropriate cost of capital and valuation model for venture capital projects. Originality/value – The paper is the first empirical paper, investigating how Estonian private equity and venture capitalists make the valuation of target companies.