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M&A Blog #17 – valuation (Comparable Company)

Francine Way

Calculating cost of debt, cost of equity, and weighted average cost of capital (WACC). The multiples calculation then proceeded as follow: Market Capitalization = Share Price * Fully-diluted Shares Outstanding. Enterprise Value = Market Capitalization + Total Debt - Total Cash. They are basically the same for this exercise.

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Post 4 - Why does the conventional DCF not work for valuing a start-up/young firm?

Wizenius

The discounting factor would be typically more compared to the one used in publicly traded firms. This discounting factor is targeted rate of return of the VC investor and is set high enough to capture the foreseen/perceived risk of operating the business and chances of its survival.

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Methods and Examples on How to Value a Company

Lake Country Advisors

Market Capitalization Market capitalization is one of the simplest and most commonly used methods for valuing a publicly traded company. Market capitalization is helpful for comparing the relative sizes of different companies within the same industry.

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Mergers and Acquisitions Valuation Strategies: Unlocking the Secrets to Successful M&A Transactions

Sun Acquisitions

Deal Financing: Valuation guides the selection of the proper financing structure for the deal, including how much capital is required and where it should be sourced. Comparable Company Analysis (CCA): CCA involves comparing the target company to similar publicly traded companies.

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Keeping Up with Delaware Appraisal Jurisprudence Since Aruba: Deal Price Reigns Supreme, But Will Recent Decision Lead to More Arbitrage?

Cooley M&A

Nonetheless, parties should be mindful of the potential impact of Regal in transactions with delayed closings (particularly those with more significant gaps between signing and closing), as it provides a roadmap for would-be appraisal arbitragers to potentially capitalize on increases in target’s value between signing and closing.