M & A: Valuation checklist
(printable)Remember these fundamental approaches when trying to asses a company's value:
- Discounted Cash Flows, adjusted for the risk free rate and the risk premium. You can calculated this in many ways, some quite sophisticated, but it is and will be a prediction of the future only.
- Price/Earnings multiple on a stand-alone basis and by comparison to peers. Note that there are many other measures that compare companies, for example by using EBITDA, Enterprise Value etc.
- Net asset value. This is a simple and static measure.
There are of course other measures and more sophisticated techniques, but the above "triangle" in most cases will be one of the starting points.
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