How do you value a company?
1 Answer(s)
Naman
A Company can be valued using 3 valuation methods:
1. Discounted Cash Flow (DCF) model
2. Comparable Trading Analysis
3. Comparable Acquisition Analysis
Comparable Trading Analysis:
Revenue EBITDA Market value Rev. multiple EBITDA multiple
Comapny 1 500 100 5000 10x 50x
Company 2 100 30 1000 10x 33.3x
You can value your company by taking the higher revenue or EBITDA multiple from the above & multiple with your company's revenue or EBITDA accordingly. It is applicable for the companies trading in the market.
Comparable Acquisition Analysis:
The difference is that mean of revneue or EBITDA multiple of other companies is taken to arrive at yours &then multiple it with your revenue or EBITDA to value your company. The other thing is it is applicable for acquired companies.
Mar 12 2014 07:48 PM
1. Discounted Cash Flow (DCF) model
2. Comparable Trading Analysis
3. Comparable Acquisition Analysis
Comparable Trading Analysis:
Revenue EBITDA Market value Rev. multiple EBITDA multiple
Comapny 1 500 100 5000 10x 50x
Company 2 100 30 1000 10x 33.3x
You can value your company by taking the higher revenue or EBITDA multiple from the above & multiple with your company's revenue or EBITDA accordingly. It is applicable for the companies trading in the market.
Comparable Acquisition Analysis:
The difference is that mean of revneue or EBITDA multiple of other companies is taken to arrive at yours &then multiple it with your revenue or EBITDA to value your company. The other thing is it is applicable for acquired companies.