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FM. Valuation Techniques Module 1-9-11

The document discusses valuation techniques including using market values for debt, calculating valuation multiples by scaling enterprise value by EBITDA for comparable companies, and that multiples are financial metrics that make companies more comparable such as the ratio of share price to earnings per share.

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gatej81787
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19 views3 pages

FM. Valuation Techniques Module 1-9-11

The document discusses valuation techniques including using market values for debt, calculating valuation multiples by scaling enterprise value by EBITDA for comparable companies, and that multiples are financial metrics that make companies more comparable such as the ratio of share price to earnings per share.

Uploaded by

gatej81787
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Valuation Techniques Module 1

01 Valuation concepts

4. Nuances of Debt and Debt Equivalents

We want to use market values for all debt and debt equivalents, but
that is not always the case.

02 Valuation multiples

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Valuation Techniques Module 1

02 Valuation multiples

The same methodology applies to companies.

In this example, we scale different companies’ enterprise value by


EBITDA.

From there, we calculate the average, median, maximum and


minimum enterprise value to EBITDA multiples.
We then apply these multiples to the target company’s EBITDA to
calculate the target’s enterprise value.

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Valuation Techniques Module 1

02 Valuation multiples

Are financial measurement tools that evaluate one financial metric as


a ratio of another, in order to make different companies more
comparable.
Multiples are the proportion of one financial metric (i.e. Share Price)
to another financial metric (i.e. Earnings per Share).

There are two main types of valuation multiples:

Equity Multiples Enterprise Value Multiples

P/E Ratio Price/Book Ratio Price/Sales EV/Revenue EV/EBITDA

There are two main methods of performing analysis using multiples:

1. Public Company Comparable

2. Precedent Transactions

03 Valuation Approach

1. Asset Approach - FMV of Net Assets


An asset-based approach identifies a company's net assets by
subtracting liabilities from assets.

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