DCF Debt Investors 
Francine Way
JULY 12, 2017
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. The major steps of DCF are: Identify extraordinary, unusual, non-recurring items from the target’s 10-Ks and 10-Qs.
Mergers and Inquisitions
MAY 3, 2023
It can be useful for certain companies, such as power and utility firms and midstream (pipeline) operators in oil & gas … …but it’s also much harder to set up and use than a standard DCF. The basic set of steps looks like this: Step 1: Forecast Revenue and Expenses This is the same as in any other 3-statement model or DCF.
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Focus Investment Banking
APRIL 7, 2024
Cost of Leveraged Buyouts: PE firms often use leveraged buyouts (LBOs) to acquire companies, relying heavily on debt financing. Lower interest rates make this debt cheaper, enabling PE firms to execute more buyouts or bid higher for target companies. This market trend can raise the comparative value of similar businesses.
Lake Country Advisors
AUGUST 8, 2024
This method is based on the principle that a company’s valuation can be estimated by looking at the prices investors have historically paid for comparable businesses. DCF is particularly useful for valuing startups or companies with predictable cash flow patterns. million Year 2: $2 million / (1 + 0.10)^2 = $1.65 million + $1.65
OfficeHours
OCTOBER 17, 2023
Existing Debt The US is a country riddled with debt. Others may have car payments, mortgages, credit card debt, or other debt that could hang over their head as a large liability. Yes, I’m interested! No, I’m not Login or Subscribe to participate in polls.
Mergers and Inquisitions
NOVEMBER 20, 2024
A: Unlike most PE deals, traditional growth equity deals do not use debt and are for minority stakes in companies, but they often have more “structure” via liquidation preferences and preferred stock. Q: Walk me through one of your deals and explain whether you would have invested in the debt or equity offering or acquired the company.
Francine Way
JULY 17, 2017
Building a historical 3-statement model and a debt-interest schedule. Building the go-forward debt-interest schedule. Implied Equity Purchase Price = Transaction Value - Debt + Cash. For this table, recall that LBO transactions are heavily financed with debt (it can go up to 90% of the capital structure for some deals).
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