Analysis of Valuation Methods of Private Acquired Companies in Russian TMT Sector (on the Example of M&A Deals Made by PJSC "MTS")

Mergers and acquisitions have always been a convenient tool for corporations to increase market share, diversify the company's product portfolio, buy new unique technologies and practices, and maintain growth at the same time that the company's organic growth stopped. Today, large TMT companies are diversifying their business through the acquisition of fast-growing start-ups, regional operators and competitors. However, due to the unstable political situation, the Russian market is becoming increasingly closed, companies do not place shares on the stock exchange, and most M & A transactions take place in a non-public format. The purpose of this study is to consider potential M & A transactions of MTS PJSC and evaluate non-publicly acquired companies using various methods to determine a fair market or investment price using financial model adjustments. The purpose of the work is accompanied by two hypotheses: 1. The cost approach and the comparative assessment method always determine the real market value of a non-public company; 2. The discounted cash flow method and the adjusted comparative valuation method can be used to determine the market price of non-public companies. According to the results of the study, the first hypothesis was rejected, while the second hypothesis was accepted. The result was achieved by building various financial models, adjustments and analyzing differences in the results obtained. However, the final conclusion can be formed only on the horizon of 5-10 years, due to the fact that the DCF-models used the forecast based on the strategies of the companies. The methodology and results of this study can be used for further deeper study of the problem posed by the author to evaluate non-public companies.