Valuation: Comps & Precedents
Walk through a simple sum-of-the-parts valuation with numbers: Segment A has $200m EBITDA (industrial peers at 8x), Segment B has $100m EBITDA (software peers at 12x), unallocated corporate costs are -$50m, and net debt is $350m.
Model answer
Value each segment on its own peer multiple: A = $200m x 8x = $1,600m; B = $100m x 12x = $1,200m. Capitalize the unallocated corporate costs at a blended multiple - roughly 9x here - for a deduction…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 1,500+ — or go Pro for unlimited reps.
More from Valuation: Comps & Precedents
- What are the main valuation methodologies?
- Why might trading comps and precedent transaction comps give different values?
- Why is EV/EBITDA often preferred over P/E for comparing companies?
- What are the three primary valuation methodologies a banker uses, and in one line each, what is each based on?
- Which of the standard valuation methodologies tend to produce the HIGHEST and the LOWEST values, and why?
- Walk me through how you perform a comparable companies analysis.