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by chirau 586 days ago
How do these deals work?

I am assuming, and I could be very wrong, that Wonder is smaller by market cap than Grubhub.

3 comments

Both companies are private, so neither has a "market cap". They just need to agree on a price.

In this case, GrubHub had taken on a bunch of debt; Wonder agreed to assume it, and GrubHub's owners/investors get $150M in cash.

> Both companies are private, so neither has a "market cap"

Private companies have shares. Given a per-share price, you can get a market cap. For a company with debt, like GrubHub, enterprise value is a better metric.

> Given a per-share price

how do you know the per-share price

> how do you know the per-share price

Same way you do for a public company. From trades and valuations. Private shares exchange hands in private transactions as well as almost every time the company raises money. If a company issues incentive stock options, they're required to calculate a 409A price, which while a bullshit number, is indeed a per-share price.

Corporations, by law, have shares.

> Same way you do for a public company. From trades and valuations.

how do you know what trades took place, and how many shares were traded, and at what price?

> how do you know what trades took place, and how many shares were traded, and at what price?

Company generally has these records. Various other sources, e.g. PitchBook, compile them. In some jurisdictions (e.g. UK and India) they have to be publicly announced, though that's becoming less common.

TL; DR It is incredibly wrong to suggest private companies don't have a market cap. As in finance 101 wrong.

But they don't need to publicly disclose it, so "you" probably don't know the price. Someone does, sure.
Wonder was valued at 3.5 billion USD in 2022: https://techcrunch.com/2022/06/17/marc-lores-food-delivery-s...
Both companies are not public. The investors need to agree on the price and the deal is done.