What does a DCF analysis for a private company often lack compared to a public company?

A Discounted Cash Flow (DCF) analysis for a private company often lacks market capitalization or Beta compared to a public company primarily because private companies do not have publicly traded equity or an active secondary market for their shares. Market capitalization is determined by the stock price multiplied by the total number of outstanding shares, which is readily available for public companies. In contrast, private companies have no market price, making it impossible to calculate a market capitalization figure.

Beta, which measures a company's volatility relative to the market, is calculated based on historical stock price movements. Public companies have sufficient trading data that allows for the estimation of Beta. Private companies, lacking a trading history, cannot have a market-derived Beta, making it challenging to assess risk and determine the appropriate discount rate for DCF analyses. These elements are crucial for understanding the cost of equity in DCF calculations, leading to potential limitations in accurately valuing private companies relative to their public counterparts.

The other options—future growth projections, shareholder equity information, and income statement details—can still be estimated or gathered through other means, even for private companies, making them less problematic in a DCF analysis context.