Leveraged Buy Out Valuation

LBO Model Valuation The LBO valuation is a central tool used to evaluate financial structure, return on investment and valuation of a potential target of a leveraged buyout. A simple LBO model starts with free cash flow projections. To reduce leverage over time funds amortize on their debt. Commonly buyout funds use a 100% cash […]

Precedent transaction valuation analysis

Precedent transactions analysis valuationis a relative valuation method based on precedent transactions and key ratios/multiples within a sector.┬áPrecedent transaction analysis is a form of comparative asset (usually stock) analysis that is used with a company considered for takeover. The idea is that when your team has control of the outfit, they can implement changes that […]

Discounted Cash Flow Model

Analysis of historical performance A crucial step in the DCF model is to collect and analyze relevant historical information in order to evaluate the historical performance. A solid understanding of the past performance will enable reasonable forecasts of future performance. The historical information should at a minimum include income statements and balance sheets. Additional information […]

Comparable company analysis

Comparable company valuation It is common that practitioners use multiples to find the value of the company they are interested in. When you want to analyze a company using a multiple in a comparable company analysis valuation, you should find a multiple that relates the enterprise value to a performance measure. Common performance measures are […]

Leveraged Buy Out Model

The Leveraged Buyout Finding a suitable target for a typical LBO is very much about finding companies that has unused debt capacity. Here cash flow plays an essential role. In a LBO model, free cash flow is used to pay down debt. LBO model valuation In theory the value of the equity in the firm […]

Discounted Cash Flow Valuation

Models Based in Discounted Cash Flow (DCF) The discounted cashflow-based method (DCF valuation method), as the traditional fundamental valuation technique, relies on the capital asset pricing model (CAPM) to compute the cost of capital. DCF Valuation There are four variants of discounted cash flow models in practice and theorists have long argued about their advantages […]