THE VALUATION

HANDBOOK
Choose Perform Consider
PROCESS
Define the Adjsut Determine Appply Sensitivity
Gather info valuation financial additional
prupose financials discount rate mehtodology analysis
method analysis factors

VALUATION PURPOSE 3 VALUATION APPROACHES VALUATION SUBJECT

Selling business Business
Buying business Project or startup
Fundraising Income approach Market approach Cost approach Real Estate
Litigations Intangible assets
Financial reporting
Financial instruments
requirements
Capital gain tax base This approach assumes Databases
This approach is This approach is based Customer relationships
calculation that the value of a
based on the idea that on the principle that the Technology
Internal decision making company is closely
Divorce reasons the value of a value of a company is Software
company is directly related to the prices of equal to the sum of
Partnerships restructuring Brand
related to its ability to comparable companies assets less the sum of its
generate income. in the market. liabilities.
WACC MULTIPLES

WACC calculation Amount

Risk-free rate
Equity risk premium
2.0%
4.72%
11 VALUATION METHODS 1. Price-to-Earnings (P/E)
Ratio
Unlevered industry Beta
2. Price-to-Sales (P/S) Ratio
0.81
Gearing (ND / E) 56.4% 3. Price-to-Book (P/B) Ratio
Relevered industry beta 1.15 4. Enterprise Value-to-EBITDA
Sub-total 7.4% 1. Discounted cash flow method 1. Valuation by multiple method 1. Net book value method Ratio
5. Price-to-Cash Flow (P/CF)
Size premium 0.5% Ratio
Country risk premium 0.5% 2. Capitalization of earnings 2. Market price method 2. Replacement cost method
6. Dividend Yield
Specific risk premium 0.7% method
3. Comparable companies 3. Reproduction cost method
Cost of equity 9.1%
3. Excess Earnings Method method
Cost of debt pre tax 3.58%
Cost of debt pre tax 3.6% 4. Relief from royalty method 4. Precedent transaction method
Corporate tax rate 25.50%

Cost of Debt after tax

VALUATION DRIVERS
2.7%

Gearing (ND / EV) 36.0%

WACC 6.8%
Financial history Selling the product Sales channels Overall business
WACC=Ke* E/(D+E)+Kd*
without anomalies across the globe diversification sustainability
D/(D+E)
Amount and trending Total addressable Level and trending in Innovative TERMINAL VALUE
Ke – Cost of equity of net income market trending churn rate technology use
E (Equity) – the market value of
equity
Kd (Cost of debt after tax) – gross Revenue Industry entry Sales stability and Ability for workforce CFn * (1 + g)
cost of debt minus tax savings transferability barriers scalability replacement TV =
D (Debt) – the market value of (WACC – g)
debt Predictability of cash Macroeconomic Intellectual property Key personnel
D+E – enterprise value
flows factors protection level expertise
• TV – Undiscounted Terminal
Value
Free cash flow DISCOUNTED CASH FLOWS • CFn – Cash Flow in the last
year of projections
EBIT + Tax + Non-cash items add • g – growth rate
Discounted Cash Flows 2024 2025 2026 2027 2028 Valuation
backs +(-) NWC change - CAPEX • WACC – discount rate
EBIT 1,938 1,589 1,655 2,019 2,372 Cumulated DCF 4,859
Tax (286) (232) (241) (295) (346)
• n – number of periods for
Terminal Value 14,507
Non-cash items added back 317 549 692 514 527 projections
Discounted Terminal Value 8,796
Net Working capital adjustments (1,193) (169) (215) (240) (272) DCF value of operations 13,656
Discounted cash flow CAPEX adjustments (750) (1,050) (450) (150) (150) Non-operating assets adjustments 1,379
Free Cash Flow 27 687 1,440 1,849 2,131
Discount factor - DF 1.105 1.222 1.350 1.492 1.649
Enterprise value
Financial liabilities
15,035
(700)
SENSITIVITY ANALYSIS
DCF = (CF/(1+r) ) + (CF/(1+r) ) + DCF 24 563 1,067 1,239 1,292 Interest bearing debt (700)
(CF/(1+r) )
Debt equivalents (165) 13,286 0.00% 0.50%
Long term CF growth
1.00% 1.50%
rate
2.00% 2.50% 3.00% 3.50%
Hybrid claims and non controlling interests 4.52% 35,723 39,653 44,698 51,411 60,784 74,787 97,978 143,810

CF = Cash Flow in the Period (225)

5.52%
6.52%
27,809
22,462
30,175
23,997
33,065
25,810
36,672
27,984
41,303
30,638
47,465
33,951
56,068
38,205
68,921
43,866

r = the interest rate or discount rate Equity value 13,945

7.52%
8.52%
18,644
15,805
19,693
16,551
20,904
17,396
22,315
18,362
23,981
19,475
25,980
20,774
28,420
22,307
31,466
24,146

n = the period number WACC

9.52%
10.52%
13,628
11,918
14,175
12,328
14,786
12,782
15,473
13,286
16,251
13,849
17,140
14,482
18,165
15,199
19,361
16,018
11.52% 10,547 10,861 11,205 11,584 12,002 12,467 12,986 13,569
12.52% 9,430 9,674 9,940 10,230 10,548 10,897 11,283 11,711
13.52% 8,506 8,699 8,907 9,133 9,379 9,646 9,940 10,262

PROJECT EVALUATION
14.52% 7,732 7,886 8,052 8,231 8,423 8,632 8,859 9,106
15.52% 7,077 7,202 7,335 7,478 7,631 7,796 7,974 8,168
16.52% 6,518 6,619 6,728 6,843 6,966 7,098 7,240 7,393

Discounting factor
NPV 2025 2026 2027 2028 2029 2030 2031 2032 2033 Terminal EVA
DF = (1+ DR)
Total inflow 300,000 330,000 363,000 399,300 439,230 483,153 531,468 584,615 643,077 2,450,303
DR – discounted rate Discount factor 1.2070 1.3260 1.4568 1.6005 1.7583 1.9317 2.1222 2.3315 2.5615 2.8141
n = projection year – starting year Present value of total inflow 248,556 248,867 249,179 249,492 249,804 250,118 250,431 250,745 251,059 870,732 EVA = NOPAT - (Invested Capital
Total outflow (407,225) (227,685) (250,191) (274,948) (302,180) (332,135) (365,086) (401,333) (441,203) 0 * WACC)
Discount factor 1.2070 1.3260 1.4568 1.6005 1.7583 1.9317 2.1222 2.3315 2.5615 2.8141 NOPAT – net operating profit
Present value of total outflow (337,394) (171,707) (171,742) (171,793) (171,860) (171,939) (172,031) (172,134) (172,247) 0 after tax

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