Lecture 4 - Valuation Handout

Lecture 4 - Valuation Handout - 1,167 1,040 926 Terminal...

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PUBLIC COMPARABLES 1) HSY TR WWY CSG QGLY RMCF PARF Hershey Co. Tootsie Roll Wrigley Cadbury Schweppes Simon Candy Rocky Mtn Choc. Fact. Paradise Inc. Revenue Multiple 2.99 3.05 3.46 2.33 1.39 2.91 0.35 Revenue 4,960,000,000 485,080,000 4,870,000,000 14,660,000,000 40,940,000 31,570,000 26,270,000 EBITDA Multiple 12.051 14.869 14.573 12.971 NA 10.906 5.295 EBITDA 1,230,000,000 99,490,000 1,150,000,000 2,640,000,000 (1,560,000) 8,440,000 1,710,000 2) Revenue x 3 Most applicable comps 1.6x Revenue x 2 Most applicable comps 0.9x EBITDA x 3 Most applicable comps 8.1x Discount Rate 15% 60% DISCOUNTED CASH FLOW Discount rate: 20% 1) Annual Cash Flow 1 2 3 4 5 EBITDA 3,180 3,657 4,023 4,224 4,435 Increase in WC 300 300 300 300 300 Cap Ex 500 500 500 500 500 Taxes 954 1,097 1,207 1,267 1,330 Free Cash Flow 1,426 1,760 2,016 2,157 2,304 2) Terminal Value Gordon Growth Model 12,129 EBITDA Multiple (4.5x) 19,957 Average 16,043 Net Debt (est.) (6,000) Exit 10,043 3) Discounted Values Annual Cash Flow 1,188 1,222
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Unformatted text preview: 1,167 1,040 926 Terminal Value 4,036 4) Total 9,579 equity value TRIANGULATE ON A NUMBER Equity Raise ($ investment) 2,000 Dynamic Confections 2007 Actual 2008 Projected Revenue 47,580.6 51,827.0 EBITDA 638.4 3,179.9 Implied Valuations: Equity Value Revenue Multiple (2007) 12,406 subtracts Net Debt Revenue Multiple (2008) 13,884 subtracts Net Debt 4.5x EBITDA (2008) 8,011 subtracts Net Debt Book Value 8,000 30% IRR (Base Case) 7,235 (from a more detailed model) Public Comp EBITDA Multiple (2008) 4,606 subtracts Net Debt DCF 9,579 Liquidation Value 3,000 Average Pre-money 8,340 Average Ownership 19% Revenue Multiple (2007) Revenue Multiple (2008) 4.5x EBITDA (2008) Book Value 30% IRR (Base Case) Public Comp EBITDA Multiple (2008) DCF Liquidation Value- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 12,406 13,884 8,011 8,000 7,235 4,606 9,579 3,000 Implied Equity Valuations Valuation Method...
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Lecture 4 - Valuation Handout - 1,167 1,040 926 Terminal...

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