Académique Documents
Professionnel Documents
Culture Documents
Valuation A Perspective
Valuation is relative to a
specific point in time
Premium
control,
efficiency
synergy
Going concern
vis--vis
liquidation
Context
for
and
Timing
Basis
Forward looking
and cash flows key
Extent of
control
Premise
Asset
Method
Earning
Method
Market
Method
2
Revenues / Earnings
Rapid
Expansion
High Growth
Mature Growth
Decline
Revenues
Earnings
Time
Revenue in high
Revenue/Current Non-existent or low Revenue
increasing/Operating growth/Operating
revenue/negative
Operations
Income still low or
income also growing
Operating income
Revenue growth
slows/Operating
income still growing
Revenue and
Operating income
growth drop
negative
Operating
History
None
Very limited
Some operating
history
Operating history
can be used in
valuation
Substantial
operating history
Comparable
Firms
None
More comparables,
at different stages
Large number of
comparables, at
different stages
Declining number of
comparables,
mostly mature
Source of
Value
Entirely future
growth
Mostly future
growth
Entirely from
existing assets
Asset Approach
Liquidation value based NAV Method
PE multiple
EV / EBIT multiple
EV / EBITDA multiple
Business Value
Asset based
Price / Book multiple
Equity Value
Business Value
Others
Sales multiple
Customer multiple
EV / Room, EV / Bed, EV / Subscriber
Business Value
Valuation Range
Income based
DCF
Rs. __ to __
CCM
Rs. __ to __
Asset based
NAV - book
Rs. ___
NAV - adjusted
Rs. ___
Market based
Market Price
Rs. ___ to __
CTM
Rs. ___ to __
Value
weightages
weightages
Customer list
Customer contract and related
customer relationships
Non-contracted customer
relationships
Based on the PV of
future earnings / cash
flows to be derived from
ownership of the asset
Excess Earnings
Relief from Royalty
Income /
Economic
Value
approach
Value
Area in which
a market exists
Value
Key Issues
Most research findings indicate that the desired anticipated
results do not necessarily fructify
Overestimation of efficiency and synergy benefits
Critically examine (cross-examine) items of such benefits. Develop
quantitative basis for benefit analysis
Run what if scenarios [benefit analysis, sensitivity analysis, return
analysis (tax sensitivity)]
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In Summary
Of late, valuations have been soft targets for dispute / litigation of
listed companies
Valuer to keep in mind fairness to all stakeholders
All in all, its hard to build assets competitively , but its harder to
value them...