Lecture 4 - Valuations

Lecture 4 - Valuations - Valuations Bus M 475 Valuation...

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Valuations Bus M 475
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Valuation When does valuation matter? Is it the only thing that matters? Combination of art and science Company value = what someone is willing to pay
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Valuation Methods Multiple analysis Public Comps Comparative Transactions IRR (Internal Rate of Return) Liquidation Value Net Assets Discounted Cash Flow
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Multiple Analysis EBITDA, FCF, Sales, Net Income But at what multiple? Private vs. Public Companies What justifies a higher or lower multiple? EBITDAx common in Private Equity Salesx common in Venture Capital - why?
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Multiple Warnings Are you using the right comps? Understand the add-backs Forward vs. TTM If using EBITDA, what about CapEx and interest expense? The Key: triangulate
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Public Comp Analysis Search for relevant comparables Similar industries Similar business models Yahoo Finance allows you to search for competitors. Drill into that. Public company databases like crmz.com Remember, when valuing a private company, you should apply a liquidity and size discount to the multiples (combined 30%-70%)
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Public Comp Analysis Compare with competitors or comparables: Revenue multiple EBITDA multiple P/E multiple Etc. Understand why certain multiples may be higher or lower
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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 4 - Valuations - Valuations Bus M 475 Valuation...

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