AN IN DEPTH ANSWER TO LEARN, if you want to follow up on your question
When 2 public companies merge, the market cap is easy because they both have established market caps.
With a private company involved it get a bit more difficult for many reasons.
Let's start with 5 things, GAAP, Goodwill, DFC, WACC, and EBITDA.
GAAP is "generally accepted accounting practices".
Goodwill is what valuation does the company place on it's "good name" and intangible assets.
For example, Boeing has a good will of 7.11% of assets or almost ONE BILLION dollars.
Fred's Floors may have goodwill of $1000.
It can be from 0 to a billion+.
And then you have DCF or "discounted cash flow", it’s more common in healthcare and bio-tech, where multi-stage DCFs to value firms based on the potential market for new drugs are more common.
Forecasted free cash flows (net income + depreciation/amortization, capital expenditures, change in working capital) are discounted to a present value using the company's "weighted average costs of capital" WACC.
The DCF method also tends to work better for more mature private companies that are sponsor/venture backed and or that have very solid comparables that you can use to calculate some of the numbers above.
What price does the private company put on their real estate assets?
How will Marker adjust many of their expenses and “normalize” them to industry-standard levels?
What is their EBITDA "earnings before interest, taxes, depreciation and amortization?
The private company’s margins may be artificially inflated because the Founder/CEO doesn’t pay himself enough (for the sake of building his/her company up).
As a private company, are there any non-standard revenue and expense recognition policies, non-business expenses being counted as business expenses, public has to use GAAP.
And there are also present and future tax considerations based on the above and GAAP.
Basically there are 2 answers to what will market cap be.
#1, You use comps or comparables to valuate.
My comps were in my first response, 442 Million to 671 Million with 535 seeming reasonable.
#2, We won't know until it's done and we know.
Hope this helps answer your question
