FMVA™ Certification

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 Business Valuation
Modeling

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Table of Contents

01. 02. 03. 04.

Introduction to Equity Value vs Comparable Precedent
Valuation Enterprise Value Company Analysis Transactions

05. 06. 07. 08.

Discounted Factors that Interpretation & Conclusion
Cash Flow (DCF) Impact Valuation Presentations of
Results

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 Learning Objectives

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Learning objectives

Understand the difference between Understand why comparable Understand why precedent transaction
equity and enterprise value and when company analysis is performed, the analysis is performed, the pros & cons
to use each of them pros & cons of it, and how to of it, and how to calculate the various
calculate the various ratios ratios

Understand what discounted cash flow Understand various factors impacting Understand how to effectively present
analysis is, how to calculate free cash valuation that cannot be discretely the results of valuation analysis
flow, WACC and NPV modeled

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CFI’s approach

We design all our courses with the following objectives:

Teach you how finance Give you a solid understanding

01. professionals actually
perform valuation
02. of key concepts, methods,
approaches

Guide you to perform

03. world class financial
analysis
04. Advance your career

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 01.

Introduction to Business
Valuation Concepts

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Why perform valuation?

Sell a business Raise money IPO Impairment Estate planning Bankruptcy

testing

Acquire a Make investment Internal business Valuing Employee Litigation

business recommendations decisions making Options and
(buy/sell/hold) Compensation

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Valuation is an art and a science

Valuation is based on expected future performance not past performance and involves:

An analysis of the financial Forecast the future operations Analysis of the industry
history and prospects of the of the business, project or asset
business, project or asset

There are various

valuation
methodologies
which may arrive at
Analysis of the economic Applying acceptable
differing values for a
environment valuation methods
business, project or
asset.

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Valuation is an art and a science

Science Art

01. Historical financials 01. Management team

02. Ratios 02. Culture and Strategy
03. Assets 03. Forecasting
04. Track record 04. “Moat”
05. Statistical analysis 05. Competition
06. Macroeconomic factors
07. Cost of capital
08. Game theory

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Overview of financial valuation techniques

Valuing a business or
asset

Discounted cash flow

Cost Market approach
(intrinsic value)
approach (relative value)
approach

Public company
Cost to build
comparables
Forecast future cash
flows
Replacement cost Precedent transactions

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Overview of financial valuation techniques

Valuation Summary
Valuation Summary–- Equity Value
Equity Value per per
ShareShare
($) ($)
55.00
$49.21
50.00
$44.00
45.00

40.00 $38.08
$36.00
35.00
$36.00 $30.00
30.00

25.00 $28.00
$24.81
20.00 $22.40 $22.00

15.00

10.00
Comps Precedents DCF - base case DCF - blue sky 52 wk hi/lo

Relative value techniques Intrinsic value techniques

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 02.

Equity Value vs
Enterprise Value

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Enterprise value vs. equity value

Market value
Debt investors
of net debt

Enterprise value Assets

Market value of
Shareholders
equity

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House example

1 2 3
Debt $100k
Debt $250k
Debt $400k
House House House
Equity
$400k Equity
Equity $250k
$100k

Answer:
Question: $500,000. The funding mix for the house is
In each case what is the house worth? independent of the value of the house - this is
what enterprise value reflects for companies.

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Terminology

Other names for Enterprise Value include…

Firm Value

Total Enterprise Value (TEV)

EV

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Terminology

Other names for Equity Value include…

Market Capitalization

Market Cap

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Net debt defined

Net debt defined ($M)

Short-term interest-bearing debt 5,000

Long-term interest-bearing debt 35,000
Gross debt 40,000

Less: cash and cash equivalents 10,000

Net debt 30,000

It’s assumed the cash can be netted against any debt owed.
Cash is not an operating asset that generates cash flow.

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Negative net debt (net cash)

Net debt defined ($M)

Short-term interest-bearing debt 5,000

Long-term interest-bearing debt 0
Gross debt 5,000

Less: cash and cash equivalents 20,000

Net debt (15,000)

Net cash 15,000

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 03.

Equity Value &

Enterprise Value Multiples

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Valuation using Equity and EV multiples

Enable you to:

Calculate and analyze

valuation multiples

Appreciate the drivers of

equity and enterprise value multiples

Value a company using

• Equity multiples
• Enterprise value multiples

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Relative valuation - multiples

The value of an asset is

derived from the pricing of
comparable assets

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Enterprise value vs. equity value

Market value 25% of cash flow

of net debt (paid first)

100% of cash flow Assets

Market value of 75% of cash flow
equity (paid second)

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Enterprise value vs. equity value

XYZ Inc. income statement

Income Statement millions

Sales 1,000
Market value Operating expenses (350) Venders & Employees
of net debt EBITDA 650
Depreciation (400) Non-cash
EBIT 250
Assets Interest (100) Debt holders
Earnings before tax 150
Market value of
Tax (50) Government
equity
Net earnings 100 Shareholders
No of shares 100 million
Share price 20.00

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Enterprise value vs. equity value

If the denominator is before If the denominator is after

interest expense, interest expense,
it’s an enterprise value ratio it’s an equity value ratio

EV/Revenue, EV/EBITDA, EV/EBIT P/E, P/B, P/CF

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XYZ Inc. financial statement extracts

XYZ Inc. balance sheet XYZ Inc. income statement

Assets millions Income Statement millions
Cash 0 Sales 1,000
Other current assets 250 Operating expenses (350)
PP&E 800 EBITDA 650
Total 1,050 Depreciation (400)
Liabilities EBIT 250
Interest (100)
Short-term debt 50
Earnings before tax 150
Other current liabilities 100
Tax (50)
Long-term debt 250
Earnings after tax 100
Common stock 250
Number of shares 100 million
Retained earnings 400
Share price 20.00
Total equity 650
Total 1,050

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Calculating EV multiples

Question:
What is the enterprise value of XYZ Inc.?
Answer:
100m shares x 20.00 per share = 2,000m plus
300m in net debt = 2,300m
Question:
What are the implied EV to sales, EV to
EBITDA, EV to EBIT, EV to capital employed
and EV to free cash flow multiples?

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EV to sales multiple

Enterprise value to sales multiple

EV Enterprise value 2,300m

2.3 times
Sales Sales 1000m

EV EV EBIT or EBITDA
Sales EBIT or EBITDA Sales

2,300m
65% 2.3 times
650m

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EV to EBITDA and EBIT multiples

Enterprise value to EBITDA & EBIT multiples

EV Enterprise value 2,300m

3.5 times
EBITDA EBITDA 650m

EV Enterprise value 2,300m

9.2 times
EBIT EBIT 250m

EV to EBIT and EV to EBITDA are prolifically used in valuation

They are used more often than other EV multiples such as EV to sales or EV to Free Cash Flow

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EV to capital employed multiple

Enterprise value to capital employed multiple

EV Enterprise value 2,300m

2.4 times
CE BV of debt + equity 950m

EV to capital employed is driven by return on capital employed

EV EV EBIT or EBITDA
CE EBIT or EBITDA CE

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Free cash flows to the firm

XYZ Inc. free cash flows to the firm

EBIT (1 - t) + D&A - Change in WC - Capex

167 + 400 – 300 - 150

FCFF

117

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EV to free cash flow multiple

Enterprise value to free cash flow multiple

Enterprise value 2,300m

EV/FCFF 19.7 times
Free cash flow to firm 117m

Reconciling free cash flow to equity and to the firm:

Free cash flow to equity 50m

Add back interest 100m

Deduct tax shield on interest (33m)

Free cash flow to the firm 117m

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XYZ Inc. financial statement extracts

XYZ Inc. balance sheet XYZ Inc. income statement

Assets millions Income Statement millions
Cash 0 Sales 1,000
Other current assets 250 Operating expenses (350)
PP&E 800 EBITDA 650
Total 1,050 Depreciation (400)
Liabilities EBIT 250
Interest (100)
Short-term debt 50
Earnings before tax 150
Other current liabilities 100
Tax (50)
Long-term debt 250
Earnings after tax 100
Common stock 250
Number of shares 100 million
Retained earnings 400
Share price 20.00
Total equity 650
Total 1,050

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Calculating equity multiples

Question:
What is the market capitalization of XYZ Inc.?

Answer:
100m shares x 20.00 per share = 2,000m
Question:
What are the implied price to earnings, price
to book and price to cash flow multiples?

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Price to earnings multiple

P/E Market capitalization 2,000m

20 times
multiple Net earnings 100m

Price to earnings multiples are driven by:

Growth prospects Shareholder risk Cash flow generation

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Price to earnings multiple

Normalized earnings multiples should reflect the on-going performance of the company.

Adjust for:

Non-recurring or Over- or under- Profits/loss on Significant provisions

exceptional items depreciation sale of property or asset write downs

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Price to earnings multiple

Problems with price to earnings:

Cannot cope with negative earnings

Earnings can be manipulated

Earnings can be volatile

Problems with cyclical firms

• Trough of cycle - high P/E
• Peak of cycle - low P/E

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Price to book multiple

The book value of equity is the total common shareholders’ equity excluding preference shares
and minority interest.

P/B Market capitalization 2,000m

3.1 times
multiple Book value of equity 650m

Price to book multiples are driven by:

Return on equity (earnings / book value of equity)

PE drivers:
• Growth prospects
• Shareholder risk
• Cash flow generation

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Free cash flow to equity

Free cash flows are used to determine how much cash a company has left after
satisfying its sustainable obligations.

Cash flows from operations –

FCFE capital expenditures + net
debt issued

Net Debt New debt issued – debt

Issued repayments

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XYZ Inc. example – free cash flow to equity

XYZ Inc. free cash flow to equity (millions)

EBIT 250
Depreciation 400
EBITDA 650
• Accounts Receivable
Working capital (150) • Inventory
Operating cash flow 500 • Accounts Payable

Interest (100)
Taxes (50)
Cash flow pre-investment 350

Capital expenditure (350)

Issuance of debt 50
Free cash flow to equity 50

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Price to free cash flow multiple

P/FCFE Market capitalization 2,000m

40 times
multiple Free cash flow to equity 50m

High P/FCFE Firm may be overvalued

Low P/FCFE Firm may be undervalued

Cash conversion (earnings / free cash flows)

P/FCFE drivers:
• Growth prospects
• Shareholder risk
• Cash flow generation

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The firm life cycle and choosing multiples

Early sign Rapid Slowing Early Late Decline

growth growth growth maturity maturity

Sales

Cash flow

Profit

Inception

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When is a multiple appropriate?

Multiple Characteristics Life cycle stage

• No cash or profit
• Pattern of sales clear • Early sign growth
EV to sales
• Ignores operating economics • Rapid growth
• Ignores capital structure
• Operating cash flow positive
• Incorporates profitability • Rapid growth
EV to EBITDA
• Ignores capital structure • Slowing growth
• Ignores tax differences
• Operating profit
• Slowing growth
EV to EBIT • Ignores capital structure
• Maturity
• Ignores tax differences
• Stable operating economics
• Early maturity
Price to earnings • Stable capital structure
• Late maturity
• Profit and cash flow similar

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Summary

The key messages from this session are:

The most commonly used equity values multiples are Price to

Earnings, Price to Book and Price to Cash Flow

The most commonly used enterprise value multiples are EV to EBIT, EV to

EBITDA, EV to sales, EV to capital employed and EV to free cash flow

Free cash flows to the firm are cash flows generated by the
business and exclude financing costs such as interest

The relevance of different valuation multiples changes over

time as business models evolve

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 04.

Comparable Company
Analysis

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Overview of financial valuation techniques

Valuing a business or
asset

Discounted cash flow

Cost Market approach
(intrinsic value)
approach (relative value)
approach

Public company
Cost to build
comparables
Forecast future cash
flows
Replacement cost Precedent transactions

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Why comparable analysis

Pros: Cons:
01. If investors are willing to pay X for our 01. No perfect comparable
competitors… they must be willing to pay Y for
02. Hard to adjust for growth, management
us
team, or other factors
02. Observable value for a company (what
03. Easy to fall into “value trap” or “overvalued
investors are actually paying for the business
fallacy” (due to above)
right now!)
03. Readily available
04. Current
05. Large number of potential companies to
compare to

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What metrics are used?

Industry specific Lifecycle specific

General examples:
01. EV/Sales 04. P/E
02. EV/EBITDA 05. P/B
03. EV/EBIT 06. P/CF

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Example

Market Data Financial Data (FY+1) Valuation (FY+1)

Market
Price Shares Net Debt EV Sales EBITDA Earnings EV/Sales EV/EBITDA P/E
Cap
Company name ($/share) (M) ($M) ($M) ($M) ($M) ($M) X X X
Micro Partners $9.45 100 $945 $125 $1,070 $268 $76 $47 4.0x 14.1x 20.1x

Junior Enterprises $5.68 1,250 $7,100 $2,00 $9,100 $4,136 $778 $412 2.2x 11.7x 17.2x

Minature Company $18.11 50 $906 $25 $931 $443 $96 $56 2.1x 9.7x 16.3x

Average Limited $12.27 630 $7,730 $350 $8,080 $1,949 $528 $294 4.1x 15.3x 26.3x
Bohemeth Industries $9.03 1,500 $13,545 $0 $13,545 $6,622 $795 $423 2.0x 17.0x 32.0x
Average 2.9x 13.6x 22.4x

Median 2.2x 14.1x 20.1x

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How to perform comparable company analysis

01. 02. 03.

Use Bloomberg / Capital IQ / Go to EDGAR / SEDAR / Download 3-5 years of historical
Equity Research Reports / Company website data
Google Finance / Yahoo finance / • Revenue, Gross profit, EBITDA,
Hoovers to find comps EBIT, net income
• Shares outstanding, share prices,
cash, debt, minority interest

04. 05. 06.

Obtain forecast metrics from Build a table and calculate Compare the adjusted average
Equity Research / Bloomberg / Market Cap, EV, all ratios, to the company you are trying to
Company Guidance / Google growth rates, margins, etc. value
Finance
• Revenue, Gross profit,
EBTIDA, EBIT, net income

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How - Selecting a comparable universe

Multiples valuation requires an in-depth understanding of the company being valued and its peers. The relative valuation is
only useful if the companies are a comparable peer group. We need to consider companies that have similar:

Business activities Geographical location Size and growth profiles

Profitability profiles Accounting policies Similar capital structures

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 05.

Precedent Transaction
Analysis

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Overview of financial valuation techniques

Valuing a business or
asset

Discounted cash flow

Cost Market approach
(intrinsic value)
approach (relative value)
approach

Public company
Cost to build
comparables
Forecast future cash
flows
Replacement cost Precedent transactions

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Why M&A precedent transactions?

Pros: Cons:

01. Shows the value investors paid for the 01. Hard to find (few transactions)
entire company (not just one share) 02. Need access to a database like Bloomberg,
02. Includes takeover premium / control Capital IQ
premium 03. Become stale dated quickly (valuations
03. Includes synergy value from years ago are not relevant today)

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What metrics are used?

Industry specific Lifecycle specific

General examples:
01. EV/Sales 04. P/E
02. EV/EBITDA 05. P/B
03. EV/EBIT 06. P/CF

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Example

Valuation
Transaction Value
Date Target Buyers EV/Sales EV/EBITDA EV/EBIT
($M)
01/24/2017 Current Ltd 2,350 Average Limited 1.9x 9.4x 11.2x

04/19/2016 Recent lnc 6,500 Bohemeth Group 1.4x 8.0x 12.6x

04/19/2014 Past Co 2,150 Other Group 1.3x 8.7x 12.1x

11/07/2014 Historical LLP 450 Junior Enterprises 2.3x 11.1x 13.6x

11/01/2012 Old Group 325 Minature Company 5.1x 18.8x 21.5x
11/07/2011 Dated Enterprises 150 Micro Partners 2.1x 9.3x 13.2x
Average 2.3x 10.9x 14.0x

Median 2.0x 9.4x 12.9x

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How to perform precedent M&A transaction analysis

01. 02. 03.

Use Bloomberg / Capital IQ / Find press release for each Obtain relevant data from press
Equity Research Reports / transaction release (may be very limited)
Google Finance to find past • Price paid
transactions • Form of consideration (cash /
shares)
• Takeover premium (implied or
explicit)

04. 05.
• Synergies announced (if available)
• Another other terms/conditions
interesting to note
Build a table and calculate Compare the adjusted average
ratios paid at the time, where to the company you are trying to
possible value

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How - Selecting relevant transactions

We need to consider companies that have similar:

Business activities Geographical location Type of transaction/buyer

Size and growth profiles Recent time period

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 06.

Intrinsic Valuation –
Discounted Cash Flow (DCF)

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Overview of financial valuation techniques

Valuing a business or
asset

Discounted cash flow

Cost Market approach
(intrinsic value)
approach (relative value)
approach

Public company
Cost to build
comparables
Forecast future cash
flows
Replacement cost Precedent transactions

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DCF valuation techniques

Value a business Calculate free cash Outline the Identify what

using a two-stage flows to the firm main drivers of discount rate to
DCF valuation and to equity free cash flows use
model

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A four-step approach

Gather critical Undertake a

01. information about the
company
02. comprehensive
company analysis

Determine the key

03. assumptions that will
drive your valuation
04. Build your valuation
model from scratch

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Step 1

Gather critical
01. information about the
company

At a minimum you should:

01. 02. 03. 04.

Review the latest Listen to the most Review available Review research on
annual report in recent quarterly sell side research the industry
detail earnings webcast /
conference call

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The public information book

Question:
What is in a public information book (PIB)?

01. 02. 03.

News releases – last 6- SEC Filings – 10Q, 10K, non- Research – industry,
12 months financial (ownership changes, comps and your client
key events) last 3-5 years (especially your own
• Familiarize yourself with the bank’s research)
various SEC Filings (e.g. proxy, 8k,
13D)

04. 05. 06.

Corporate / investor Credit ratings – 2 to 3 rating Conference call
presentations – industry agency reports transcripts – pay
conferences, investor calls (e.g. particular attention to the
quarterly conference calls) Q&A by analysts

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Step 2

Undertake a
02. comprehensive
company analysis

At a minimum you should undertake:

01. 02. 03.

A thorough assessment and An assessment of the management A robust review of a
critique of a company’s stated team and its ability to deliver company’s financial
strategy supported by evidence against its stated strategy statements

04. 05.
A detailed and quantified An assessment of industry
assessment of a company’s dynamics within the industry as
competitive advantages / well as general economic and
disadvantages demographic trends

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Valuation starts with…

Assessing future sustainable cash flows requires an analysis of the company, industry, and external
environment.

Company

Industry

External
Environment

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Tools for analyzing the external environment

PEST analysis is a useful framework for analyzing the external environment.

Political Social
forecasting forecasting

Identify
Anticipate opportunities and React
threats

Economic Technological
forecasting forecasting

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Tools for analyzing industry dynamics

Porter’s 5 forces is a powerful tool for assessing industry attractiveness. Michael Porter identified
FIVE forces driving industry competition:

Potential new entrants

and barriers to entry

Suppliers and their Rivalry amongst Buyers and their

bargaining power firms in industry bargaining power

Threat of substitutes

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Tools for assessing competitive advantage

Michael Porter identified the following strategies for gaining competitive advantage in an industry.

Broad target
1. 2.
Cost Differentiation

Competitive scope
Leadership

Narrow target

3a. 3b. Differentiation

Cost Focus Focus

Lower cost Differentiation

Competitive advantage

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Tools for assessing the business lifecycle

Problem child Rising star Cash cow Dog

$ Launch Growth Shake Maturity Decline

-Out
Life cycle
extension

Sales

Cash

Profit

Time (years)

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Tools for assessing management

Question:
When assessing a management team’s character, which particular aspects / traits should you consider?

01. 02. 03.

Past performance – What Reputation – What do the press, Planning – Is there a clear
does their track record look customers, suppliers, and the and consistent business
like? competition say about strategy? What is
management? management’s approach
to growth?

04. 05.
Experience/stability – Attitude towards risk –
Qualifications, business Have risks been identified?
and financial acumen, Are there mitigation
time in business, etc. strategies in place?

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Putting it all together - SWOT

Strengths Weaknesses

Internal factors which already exist and have contributed to the current position and may
continue to exist.

Opportunities Threats

External factors which are contingent events. Assess their importance based on the likelihood of
them happening and their impact on the company. Also consider whether management have
the intention and ability to take advantage of the opportunity/avoid the threat.

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Step 3

Determine the key

03. assumptions that will
drive your valuation

From your analysis to date, determine the key assumptions that will drive your valuation. In
particular, you must determine what will drive the following:

01. 02. 03.

Revenues Gross margins EBIT(DA) margins

04. 05. 06.

Working capital Capital expenditure Capital structure
(debt versus
equity)
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Step 4

04.
Build your valuation
model from scratch

Company Value of the future cash flows generated by the company discounted
value at the required rate of return demanded by the investors

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Two stage DCF valuation model

1 2

Value of
Cash flows for forecastable period Terminal value
the firm

The two-stage approach to DCF valuations is a common solution to the problem of how we
forecast the cash flow of a company because of issues of uncertainty:

We do not know how long the company will Forecasting is estimation. The further we
exist and hence how many years to include in predict into the future, the more prone to
our cash flow forecast error our estimates become.

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Free cash flows to the firm

Free cash flows to the firm are the cash flows available to all funding providers (debt holders, preferred
stock holders, common stock holders, convertible holders, etc.)

EBIT

(1 – Tax Rate)

Depreciation and Amortization

Changes in Working Capital

(Deduct net increase in working capital)

Capital Expenditure

Free Cash Flows to the Firm

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Forecasting free cash flows

Forecast Drivers
Revenue
• Market size
• Sales mix
• Volume/price
Operating EBIT x (1 – T)
• Materials price margin (NOPAT)
• Staffing levels
• Wage rates
Taxes
• Tax effective Free
structures cash flow

• A/R, Inventory, Working

A/P capital
• Terms Total capital
• Plant life
• Maintenance Capital
• Scale
expenditures

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 07.

Weighted Average Cost of

Capital (WACC)

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Estimating the cost of capital

The discount rate used in DCF valuations is based on the cost of capital.

There are two main sources of capital funding – debt funding and equity funding.

What is the
Equity
cost of equity?
Assets

What is the
Debt
cost of debt?

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Calculating the WACC

Equity risk
premium

Cost of
Beta Cost of equity
equity

Weighted
average Weighted
cost of Risk free rate
average cost of
capital capital
Average yield on
debt
Cost of Cost of debt
debt (after-tax)

Tax shield

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Factors affecting cost of equity

Question:
What factors affect share prices?

Beta Alpha
01. Market risk 01. Firm-specific risk
02. Interest rates 02. Management
03. Business/economic cycle 03. Profits
04. Inflation 04. Operations
05. Political/legislation 05. Projects
06. Socio-economic 06. Products

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CAPM risk / reward model

Return %

Risk premium
between 3% and 9%

Risk Risk free rate is normally taken as the yield on a

free rate long-term government bond in the country
where the project/company is based.

Beta of the market Risk (market)

=1

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Beta is the slope of the line of best fit

Beta can be understood as the slope (gradient) of the line of best fit.

x x
x x x
x x
x x
x Market (% change)
- x +
x x x
x
x x

Beta = slope of the line

-
Share (% change)

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The weighted average cost of capital (WACC)

Equity Debt
WACC Ke Kd
Debt + Equity Debt + Equity

Where
Ke = Cost of equity = RFR + (Beta x MRP)
Equity = Market value of equity
Debt = Market value of debt
Kd = After tax cost of debt

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CAPM cost of equity example

Internet Co CAPM calculation

You have been provided with the following information for Internet Co:

5.0% 4.0% 2.38

Risk free rate Equity market Beta
premium

Calculate the equity return required by Internet Co. shareholders

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CAPM example solution

Internet Co. CAPM calculation

Risk free + (β x Equity market premium)

5.0% + (2.38 x 4.0%)

Return required by
shareholder
5.0% + 9.52%

14.52%

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WACC example

Consider the following information for Brick and Mortar Co:

10% 15% 30% 10m 40m

Cost of debt Cost of equity Tax rate Market value of Market value of
debt equity

Question:
What is the WACC of Brick and Mortar Co?

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WACC example solution

40 10
15.0% + 10.0% (1 – 30.0%)
40 + 10 40 + 10

(80.0% x 15.0%) + (20.0% x 7.0%)

WACC

12.0% + 1.4%

13.4%

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 08.

Analysis and Presentation

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Overview of financial valuation techniques

Valuing a business or
asset

Discounted cash flow

Cost Market approach
(intrinsic value)
approach (relative value)
approach

Public company
Cost to build
comparables
Forecast future cash
flows
Replacement cost Precedent transactions

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Overview of financial valuation techniques

Valuation Summary
Valuation Summary–- Equity Value
Equity Value per per
ShareShare
($) ($)
55.00
$49.21
50.00
$44.00
45.00

40.00 $38.08
$36.00
35.00
$36.00 $30.00
30.00

25.00 $28.00
$24.81
20.00 $22.40 $22.00

15.00

10.00
Comps Precedents DCF - base case DCF - blue sky 52 wk hi/lo

Relative value techniques Intrinsic value techniques

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 09.

Conclusion

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Recap of learning objectives

Understand the difference between Understand why comparable Understand why precedent transaction
equity and enterprise value and when company analysis is performed, the analysis is performed, the pros & cons
to use each of them pros & cons of it, and how to of it, and how to calculate the various
calculate the various ratios ratios

Understand what discounted cash flow Understand various factors impacting Understand how to effectively present
analysis is, how to calculate free cash valuation that cannot be discretely the results of valuation analysis
flow, WACC and NPV modeled

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