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M&A Blog #16 – valuation (Discounted Cash Flow)

Francine Way

As I mentioned in my last post, Discounted Cash Flow (DCF) is a valuation method that uses free cash flow projections, a discount rate, and a growth rate to find the present value estimate of a potential investment. Derive Free Cash Flow to Firm (FCFF).

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Methods and Examples on How to Value a Company

Lake Country Advisors

Adjust for Differences: Make necessary adjustments to account for differences between the target company and the comparables, such as growth rates or profit margins. The underlying principle is that the value of a business is equal to the present value of its expected future cash flows, taking into account the time value of money.

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M&A Blog #14 – valuation (roles, types, equity & enterprise values)

Francine Way

There are also structural differences of past acquisitions to take into account. Do they have the cash of debt/equity capacity to bid aggressively? It is calculated as the Equity Value plus Net Debt plus Preferred Stock plus Minority Interest. It is calculated as the share price times the fully-diluted shares outstanding.

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The Verdict is In on the Sell Side: Business Valuation Basics

Successful Acquisitions

Valuation serves various functions, such as litigation in partner disputes and divorces, tax and estate matters, accounting and regulatory compliance, and the heart of it all, mergers and acquisitions. It involves adjusting for non-recurring items, operating assets or liabilities, and accounting conversions.

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Buy Side M&A Blog Series - Vol 7 - Valuing The Target

RKJ Partners

Below are the six recognized methodologies with short explanations of each: Discounted Cash Flow (DCF) Analysis: This analysis derives an ‘intrinsic’ value of a company. This means that the method evaluates the future cash flow of the company and then discounts those cash flows to the present day.

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Should I Sell My Insurance Agency?

Sica Fletcher

Other times, they are hoping to use their share of the sale to alleviate personal debt. Having steady amounts of cash/accounts receivable on file demonstrates an observable level of financial stability, as well as being able to cover any short-term expenses the agency might incur. Manageable Debt.

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Creating an M&A Playbook with ChatGPT as Your Consultant

Midaxo

Establish a valuation methodology : Choose the valuation methods that best suit your company and target industry, such as discounted cash flow, comparable company analysis, or precedent transactions. You may also need to engage external advisors, such as accountants, lawyers, or consultants, for specialized expertise.

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