The trial of “pharma bro” Martin Shkreli, accused of defrauding his hedge fund investors and misusing funds from a company he founded, Retrophin Pharmaceuticals, took a turn from discussions of Shkreli dragging his feet on giving people their money and the value of his investors’ horses to a topic near and dear to a Forbes reporter’s heart: how the heck do you value a company that is not publicly traded?
For publicly traded companies, it’s easy to estimate what they’re worth: just take the number of shares outstanding in the company, and multiply that by the most recently traded share price. This is called the market capitalization, or market cap, and it is a snapshot of the value of a company.
