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As I mentioned in my last post, DiscountedCashFlow (DCF) is a valuation method that uses free cashflow projections, a discount rate, and a growth rate to find the present value estimate of a potential investment. Derive Free CashFlow to Firm (FCFF).
It’s integral to ensuring that the sale benefits all stakeholders and should be one of your priorities before advertising it to potential buyers. It’s a delicate balancing act, as inaccurate valuations have polarizing consequences. However, company valuation isn’t as simple as slapping a price on your business.
Access to credible sources of information such as SEC EDGAR database , Treasury.gov , OECD GDP Forecast , Mergent Online, S&P Capital IQ, Hoovers, ValueLine, Yahoo Finance , MarketWatch , and Damodaran Online. longer-term loans (term loans, senior bonds, unsecured debts), and (small portion of) cash on hand.
It’s a balance where numbers meet intuition, and neither aspect should be ignored. Purposes of Valuation Before diving into the nuts and bolts of valuation, it’s crucial to understand its purposes. In M&A, normalized EBITDA is crucial for attaching a multiple and forecasting cashflows.
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. Let’s Talk.
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