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Learn/Valuation and deal modeling
LearnValuation and deal modeling

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B Basic

  • Standalone value from the buyer's seat9m
  • Comps and precedents for a buyerPro8m
  • Valuing synergies properlyPro10m

A Advanced

  • Accretion and dilution, the full buildPro12m
  • Breakeven synergies and the most you can payPro10m
  • Return on capital and the currency you pay withPro11m
  • FlashcardsPro0/15
  • Basic quizPro80% passes
  • Advanced quizPro80% passes
  • Terms

Valuation and deal modeling

0
of 6 lessons
0
of 15 cards
FlashcardsStart the first lesson

How a corporate buyer values a target on its own, adds what the deal itself is worth, and checks the price against EPS, return on capital, and the currency it pays with.

BBasic3 lessons

  1. 1Standalone value from the buyer's seatBefore synergies, a buyer asks what the target is worth exactly as it is. The answer depends on the target's cash flows and the target's risk, not the buyer's.9 min
  2. 2Comps and precedents for a buyerProTrading comps say what the market pays for a slice of a similar company. Precedent deals say what buyers paid for all of one. The gap between them is the control premium.8 min
  3. 3Valuing synergies properlyProA run-rate synergy number is not a value. It has to be taxed, phased in, charged with what it costs to achieve, and discounted.10 min
  4. QBasic quizPro8 questions, 80% passes

AAdvanced3 lessons

  1. 4Accretion and dilution, the full buildProA real deal is paid with a mix of cash, debt, and stock, carries synergies and new amortization, and has to be modeled line by line.12 min
  2. 5Breakeven synergies and the most you can payProTurn the accretion model around: how much synergy makes the deal neutral, and what price makes it neutral with none.10 min
  3. 6Return on capital and the currency you pay withProEPS is one test. The other two are whether the deal earns more than its cost of capital, and what happens to the price when the buyer's own shares move.11 min
  4. QAdvanced quizPro8 questions, 80% passes