There is strong evidence from previous research that a discount exists for U.S. private companies relative to their publicly traded peers. Since such a PCD has substantial inf luence on the valuation of private companies, which are the main legal corporate form in Europe, we analyze, in our study, how European private companies are valued in comparison to their European publicly traded peers. We use the acquisition approach on a large sample for the 11 European countries that introduced the euro on January 1, 1999. The timespan for the selected transactions is 11 years, from 1999 to 2009. The structure of the study is based on the structure KSS used in their research on the PCD. To get the most comparable transaction pairs, we use strict selection criteria, and for valuing the PCD we choose the EBITDA multiple as the most suitable one. As a result, we find that a discount of around 5% exists for Eurozone private companies in comparison to their publicly listed peers.This is lower than the potential costs for an IPO and supports our theory that a listing gives the owner a valuable option of selling minority stakes into the stock market. However, this option does not carry the same value for every investor/owner. We also find that when using the acquisition approach, size and profitability have no significant inf luence on the PCD, which implies that every sale is unique and depends on the special situation surrounding the sale.
