Take Private Case Study Question
Doing an entry levelPEcase study and just wanted to check whether myapproach to valuationis correct with the wider community.
It's a take-private situation where I need to figure out the entry purchase price and multiple. Nocompsare given. I only have share price trading history, financials and broker reports.
For my entry valuation, I have assumed a premium to the latest trading level of 30%, multiplied by the total number ofshares outstanding and addednet debt, which gave me the entry enterprise value.
Is my approach broadly correct?
谢谢!
Comments (5)
No. The point of theLBOis to calculate what you can acutally offer to make a pre-set return (e.g. 25%IRRon equity). So the offerprice is the plug (the result), not an assumption.
Well adding my 2 cent I'd say the author's approach is not wrong - after computing entryEV/EBITDAand applying that mult to exitEBITDAyou will be able to computeIRRand create a quick sensitivity table - sensitizingIRRto various entry andexit multiples. That information can already give you a good idea what should be the price for 25%IRR. Or am I missing something?
Author approach is fine as long asyou have sensitivityon premium / implied entry multiple. If you're given an explicit entry multiple then the point is tooutputIRRand assess if it's a good deal for that price.
如果你没有给出一个明确的价格,然后你better off setting a leveredIRR,如果利用的假设,然后发现the implied "highest Price" you can afford to pay to get that return (an affordability analysis).
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do u need help sourcingcompsEV/EBITDA+Precedent transactionsEV/EBITDAto rationalize a multiple and valuation? I can show you how to source that for a given company prettyeasily in public filings.
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