Lecture 3- Enterprise and Equity Value

Lecture 3- Enterprise and Equity Value - Looking to raise...

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    Equity Value Bus M 475
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Valuations What is the difference between enterprise and equity value? How do you know if a valuation provides an enterprise value or equity value? Valuation examples: EBITDA multiple Revenue multiple DCF P/E ratio Comparable transactions
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Enterprise Value is the “All-in” Value of a Company Two pieces: Equity Value and Net Debt Equity value is market cap: just like public companies What is “Net Debt”? Interest Bearing Debt – Cash Enterprise Value = Equity Value + Net Debt Cap tables show the equity side of the equation. Why? Ex: $10mm Enterprise = $6 mm Equity + $4mm Net Debt
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Ragnar Relay Founded by 2 BYU Students (Dan and Tanner) $50,000 seed capital from Dan’s father (Steve) Mirrored off of the Hood-to-Coast in Oregon Started as a 12-member relay race from Logan to Park City Came to Dolphin in 2006 after 2 years of history Met at BYU Student Entrepreneur of the Year Competition
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Unformatted text preview: Looking to raise $200,000 to fund new race start-up costs Cap Structure The two founders Dan and Tanner each owned 1/3 Dans Father (Steve) owned 1/3 Steve invested $50,000 to fund the companys start up CAP TABLE Investment Pre-Money Post-Money Dan 33%-$ Tanner 33%-$ Steve 33% 50,000.00 $ 100,000.00 $ 150,000.00 $ Post money = Investment / & Purchased Post money = $50,000 / 33% Post money = $150,000 Pre money = Post money - Investment Pre money = $150,000 - $50,000 Pre money = $100,000 Simple Example A company has $250,000 in loans and $100,000 cash What is the net debt? Interest Bearing Debt = $250,000 Cash = $100,000 Net Debt = $250,000 - $100,000 Net Debt = $150,000 Simple Example Youll invest $200,000 into this company The company has $100,000 in EBITDA You value it at 5x EBITDA What percent of the company does it buy you? Hint: Ownership = Investment / Post-Money Company S&S Group Problem...
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This note was uploaded on 03/06/2012 for the course BUS M 475 taught by Professor Gregpeterson during the Fall '11 term at BYU.

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Lecture 3- Enterprise and Equity Value - Looking to raise...

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