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A financial buyer intends to purchase a 4% stake in Casino Royale Ltd., a private company...

A financial buyer intends to purchase a 4% stake in Casino Royale Ltd., a private company with revenues of about $35 mil. You have been hired to value the company using transaction multiples from acquisitions of private firms by financial buyers. What adjustments, if any, would you make to the estimated value of Casino Royale Ltd.?

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Answer #1

As the stake is a minority stake, we need to account for Minority Discount. As the company is proivate and the transaction multiple is for public companies, we need to account for Liquidity Discount. As the company is smaller in size, we need to account for Size Discount.

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