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Thus far, we have covered four popular valuation methods in M&A (DCF, Comparable Company, Precedent Transaction, and LBO) and one less known one that is making its way out of the academic realm into the business world (Dividend Discount Method, DDM). The 2nd valuation method for today is the Liquidation Value method.
Growth equity firms could invest in any industry but tend to be skewed toward technology and TMT , with some exposure to consumer/retail , healthcare , and financialservices. What accounts for the difference? At some firms, the answer is “a lot more sourcing.”
Some methodologies are inappropriate for early stage businesses or those engaged in certain enterprises such as software development or financialservices, where fixed assets are not usually important enough to use for purposes of valuation. Comparable Company Analysis: This analysis provides “relative” valuation.
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