You are an analyst working for a major investment bank, and you have been approached by ByteDance Ltd, a Chinese internet technology company, to buy a 5% equity share in the firm. Your manager has asked you to provide research into the company and its valuation. As with any privately owned companies, the valuation is tricky, as ByteDance is not bound by the same disclosure requirements as a publicly listed company. 1) Critically analyse the difficulties in the valuation of private companies and apply your findings in the case of ByteDance. 2) Critically evaluate the political risks of this investment in light of the recent clampdown of the Chinese authorities on local tech companies.
You are an analyst working for a major investment bank, and you have been approached by ByteDance Ltd, a Chinese internet technology company, to buy a 5% equity share in the firm. Your manager has asked you to provide research into the company and its valuation. As with any privately owned companies, the valuation is tricky, as ByteDance is not bound by the same disclosure requirements as a publicly listed company. 1) Critically analyse the difficulties in the valuation of private companies and apply your findings in the case of ByteDance. 2) Critically evaluate the political risks of this investment in light of the recent clampdown of the Chinese authorities on local tech companies.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
You are an analyst working for a major investment bank, and you have been
approached by ByteDance Ltd, a Chinese internet technology company, to
buy a 5% equity share in the firm. Your manager has asked you to provide
research into the company and its valuation. As with any privately owned
companies, the valuation is tricky, as ByteDance is not bound by the same
disclosure requirements as a publicly listed company.
1) Critically analyse the difficulties in the valuation of private companies
and apply your findings in the case of ByteDance.
2) Critically evaluate the political risks of this investment in light of the
recent clampdown of the Chinese authorities on local tech companies.
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