Show:
Comps
Precedents
Valuation
Markets
Key Considerations
100

Are comps an intrinsic or extrinsic form of valuation?

extrinsic 

100

Are precedents an intrinsic or extrinsic form of valuation?

extrinsic 

100

What is the formula for Enterprise Value 

Equity value + Pref Stock + Minority Interest + Net Debt 


also can say Equity Value + Net Debt 

100

What will likely have a greater comps EV / EBITDA multiple - Tech or Utilities

Tech

100

what are some forms of intrinsic valuation? how do they differ from extrinsic?

DCF and LBO are purely based on analyst assumptions

200

Walk me through the steps of creating comps 

  1. Select the universe

  2. Locate financial information 

  3. Spread key statistics, ratios, and trading multiples 

  4. Benchmark 

  5. Determine valuation

200

Walk me through the steps of creating precedents 

  1. Select the universe

  2. Locate financial information 

  3. Spread key statistics, ratios, and trading multiples 

  4. Benchmark 

  5. Determine valuation

200

what are a few common multiples 

EV / EBITDA, EV / EBIT, EV / Sales, P/E

200

What will likely have a greater D/E ratio - REITs or Consumer Services

REITs

200

What would you do when creating market valuation for a private company 


a. discount

b. consider synergies

c. grow at 3% in perpetuity

d. nothing because its just a company

A.

300

How do you select a universe?

consider business and financial criteria/profile  

300

What mainly differentiates precedents from comps 

control premium 

300

When would I use EV instead of Equity Value 

Attributable to both debt and equity 

300

What are important market factors to consider when searching for universe

business profile, financial profile, and relevancy 

300

Pros and cons of Comps and Precedents 

  • Pros:

    • market based

    • relative

    • quick and convenient 

    • current 

  • Cons:

    • market based

    • absence of close comparables 

    • possible disconnect from cash flow 

    • company-specific issues

400

Where will you locate IS, BS, and CFS data 

BamSec // 10k, 10q, 8k

400

Why are precedents important 

Shows you what the market extrinsically values your business if you were to sell. This is also relative    

400

What is the formula for UFCF & LFCF, and what would you determine for each - enterprise value or equity value  

UFCF = NOPAT + D&A - Capex - positive changes in NWC == Enterprise Value

LFCF = Net Income + D&A - Capex - positive changes in NWC - mand debt repayments == Equity Value 

400

Will your valuation stay the same within the span of a week?

Depends, traditionally you provide a range so it should but drastic noise can move value 

400
Are comps and precedents always accurate? Essentially, could you run an analysis right now and that still holds true in 2 years?

It may serve as a relative approximation but depends on many factors. For instance, if you wanted to sell your business now but the process takes 2 years. Then the market will change and so will your premium or extrinsic value. Your valuation may only serve meaningful if the environment is the exact same

500

In output would you show a single number or range 

range 

500

This type of multiple is most common in precedent transactions analysis because it normalizes for differences in capital structures

EV/EBITDA

500
List the 4 valuation methods and rank them from lowest to greatest 

LBO (floor valuation), Comps, Precedents (premium), DCF can go either way as its based on your assumptions 

500

What are some market factors that would change valuation output?

Noise - litigation, earnings, change in board of directors, etc. 
500

1. Can you use private companies in your comps? 2. Can you use comps for a private company?  

1. not recommended 

2. yes