Business valuation professionals often use public stock market data to value private businesses — even though there are critical differences between closely held and publicly traded companies. Here’s an overview of how valuators modify their analyses to take advantage of objective, market-based indicators of value. Recognizing key differences Public companies differ from private ones in the following five critical ways: Level of oversight, differing goals. The Securities and Exchange Commission requires public companies to file paperwork (such as annual 10-K forms) and comply with its rules and regulations (such as the Sarbanes-Oxley Act). Private businesses are generally exempt from these requirements, freeing them to focus less on earnings per share (a short-term performance metric) and more on long-term or non-financial goals. Additionally, private businesses commonly downplay...