Hi,

I am currently writing my Msc. Thesis in Finance on the topic of ''the Private Company Discount''. In order to research this phenomenon I have collected a dataset of approx. 2000 private M&A transactions and 6000 public M&A transactions from 1985-2017. In order to calculate ''the discount'' I want to make a reference portfolio of public transactions for each private transaction observation. I can then compare the median deal multiple of the public transactions with the private transaction to establish the Private Company Discount.

However, I am having trouble on how to construct the reference portfolio of public transactions for comparison. I have three criteria on which the public transaction should match with the private transaction:

1. the announcement date of the public transaction must lie within a range of three calendar years before or after the announcement date of the private transaction

2. at least the first 2 digits of the industry SIC code must be the same, but matching on the 3 or 4 digit level is preferred over the 2-digit level

3. The companies must be similar in size such that Total assets or net sales must be similar

for criteria 3 I have already divided the dataset in percentiles such that I have 4 categories of ''size'' for these 2 variables. So the transaction is matched if either Total assets ór net sales lies in the percentile (or both).

I want to establish a reference portfolio of at least 5 comparable transactions per observation, whenever this cannot be established the year criterion can be relaxed.

I would not know how I should establish this with Stata, any help would be very much appreciated! I am using Stata 14 on Windows10

Thanks in advance!

I am currently writing my Msc. Thesis in Finance on the topic of ''the Private Company Discount''. In order to research this phenomenon I have collected a dataset of approx. 2000 private M&A transactions and 6000 public M&A transactions from 1985-2017. In order to calculate ''the discount'' I want to make a reference portfolio of public transactions for each private transaction observation. I can then compare the median deal multiple of the public transactions with the private transaction to establish the Private Company Discount.

However, I am having trouble on how to construct the reference portfolio of public transactions for comparison. I have three criteria on which the public transaction should match with the private transaction:

1. the announcement date of the public transaction must lie within a range of three calendar years before or after the announcement date of the private transaction

2. at least the first 2 digits of the industry SIC code must be the same, but matching on the 3 or 4 digit level is preferred over the 2-digit level

3. The companies must be similar in size such that Total assets or net sales must be similar

for criteria 3 I have already divided the dataset in percentiles such that I have 4 categories of ''size'' for these 2 variables. So the transaction is matched if either Total assets ór net sales lies in the percentile (or both).

I want to establish a reference portfolio of at least 5 comparable transactions per observation, whenever this cannot be established the year criterion can be relaxed.

I would not know how I should establish this with Stata, any help would be very much appreciated! I am using Stata 14 on Windows10

Thanks in advance!

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