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Calibration and OPM Techniques in the Valuation of Early Stage Enterprises

How can Calibration with Option Pricing Models be applied to the valuation of equity interests in a portfolio company based on the latest round of financing? See our articles in the Business Valuation Update (BVR) on this topic. The article is based on Case 9 in the AICPA Guide on the Valuation of Portfolio Investments of Venture Capital and Private Equity Funds and Other Investment Companies. In addition to considering the key provisions of the Guide as they apply to Early Stage Enterprise valuation, we provide practical examples of calibration at initial measurement and subsequent measurement periods under ASC 820. We thank Neil Beaton as a co-author of the article.