The valuation of a company is conceptually similar regardless of whether its shares are held privately or through a public market. The company value primarily comes from its ability to generate revenues and earnings and the risk associated with achieving those earnings. However, there are some factors that affect the comparability of private and public company values:

Firstly, the shares of public companies are traded on a stock exchange. This provides investors with a ready market to buy and sell shares of this company. In investment terms, this provides a "liquid" market for the investor and the company. In contrast, there is generally no ready market for the purchase or sale of a private company. The owner of a private company often has a very difficult time in selling the company. This lack of "liquidity" typically results in lower valuation multiples, such as the price/earnings multiple, for private companies compared to public companies.

Secondly, the stock market is a market for partial interests in the public company. The shares traded on the stock exchange may reflect a minority discount since the minority shareholdings don't have the ability to affect the direction of the company. Conversely, the value determined for a private company generally reflects a majority position.

Thirdly, the stock market can be very volatile due to many external factors and at times may reflect over or under valuations of a company. The stability of the trading prices of the public company must be evaluated for any meaningful comparisons to a private company.

Fourthly, a public company may have favourable economic benefits from size, service mix, geographic coverage, dominance in an industry, etc relative to a private company. These factors can fundamentally limit the value comparison of a private and public company.

Finally, the tax structure in Canada for private companies is different than that applicable to public companies. This affects the comparability of (a) the measurement of the net earnings of either type of company and (b) the investor's after tax position from a transaction in the shares of either type.