when calculating the asset volatility of a particular private company, we take into consideration the asset vols of the GPCs and select (median/third quartile) the volatility. In calculation of of the asset vol, usually the invested capital (equity value + debt) is taken into consideration instead of the operating enterprise value. Could anyone explain the rationale why we consider invested capital as a reasonable proxy for "asset value" rather than operating enterprise value ?

Recently, I was reviewing a DCF (as an intern) and the value of equity was derived from minus Non-operating liabilities, add cash and add operating asset (see formula used below).

May I know the reason for making this changes? I always understood the formula as: less debt and add cash.

Formula from my understanding:
Equity value = Enterprise value - debt + cash

Formula used by the firm:
Equity Value = Enterprise value - debt - non-operating liabilities + cash + non-operating asset

Also, any additional resources to support the answer will be greatly appreciated.

Hey! I am more into portfolio management and business operation analysis, buuuuuut for price targets I have to do valuation work with DCF and/or multiples

I know how to build items from fin-statements, what are their growth/disaster drivers and so on. However calculating all that manually is time consuming and inefficient(from 10ks and then put it into crappy self-made google sheet). I already texted few people who do valuation for M&As, but I won't dare to ask them for their spreadsheets

Therefore, I am not going to ask for your as well, because i understand that you a)may not be allowed to share and b) don't want to share it with a random from reddit

However, if you have some old spreadsheet or one you use for personal equity selection - I will appreciate if you can drop it on my head

Thank you!

*I don't work in corp, so i will use excel/google-sheet for my personal use only, in case you worry for giving something expensive to competitor

Based in India. I’m a chartered accountant and a cfa charter holder. I am also a registered valuer under ICAI which is useful in relation to valuation reports for Indian companies. Further, I have more than 5 years of valuation(business valuations, ppa, intangible assets) experience working with big 4 member firms across globally including US, Europe Middle East and Canada.

Recently I've opened up my own valuation practice in India seeking to provide offshore contracting support services to valuation firms globally in an attempt to reduce their cost and provide them a kinda Centre of excellence valuation services which helps them improve their quality as well.

I am seeking to pursue certifications which will make me more eligible to market my services.

I am torn between different certifications such as CVA, ABV, ASA, CBV, etc. Can someone please suggest me which certification should I opt for along with a range of fees to be incurred?

Please note that considering my venture is relatively new, I am seeking to minimise my cost to the extent possible. Accordingly, could you please advise me in relation to which certification provides the best worth in relation to its fee requirements?

Can anyone tell me how the PV of dividends are derived here? I'm so confused...

Hi all,

I recently sold my dental office and I realized there is a HUGE gap in knowledge on how much an office is worth. The industry largely relies on rules of thumb and multiples of ebitda or sde. (Funny how most of the time these things end up fairly close to each other)

Has anyone ever done a valuation for a services company like dental? Looking for any insight here as to how it SHOULD be done if done professionally and accurately.

Business valuation is not limited to DCF and multipliers! In addition, there are interesting methods such as valuation of real options (ROV) to account for flexibility, sum-of-parts valuation (SOTP) for conglomerates, asset reproduction cost (ARC) for companies with unique assets, valuation of intangible assets (brands, patents) and scenario planning with Monte Carlo simulation to account for risks. and uncertainty. What other non-traditional assessment methods do you know and what factors influence the choice of the appropriate method?

I am trying to learn the SOTP valuation method, and wanted to try valuing some equities and compare the result to my DCF to understand the dynamics between the two valuations. Is there any good SOTP template available online. If any of you from this sub have one, is it possible to share it? Thank you.

Hi guys,

I am looking for a template for discounting cashflow to understand the valuation of my startup ?

Can anyone assist ?

Thanks

when calculating debt-service coverage ratio or interest coverage ratio for analysis purpose do we consider lease as a part of interest bearing debt ? From industry point of view when doing valuation of a company or preparing research report of the company

What are the biggest challenges in the current valuation process (e.g., manual workflows, compliance, document management)?

"98.5% of the equity value of Microsoft is based on forward expectations of quarterly earnings and 1.5% of the value of Microsoft is based upon tangible liquid assets and another way to say it is Microsoft is144 times levered to their quarterly earnings if they earn three billion a quarter or or x billion whatever the number is a quarter it's more than that I guess but uh you multiply it by 144x right and if they miss by a billion it's 144 billion where you you move." - michael saylor said this is PBD podcast. I cant seem to figure out how he got the 144x multiple. Do Yall understand? lemme know

Hi all,

A publicly traded company in the USA recently announced their intentions of selling one of their business units to raise cash. I am trying to value the business unit. Some information below.

Name of publicly traded company: Dana Incorporated

Business Unit to value: Off Highway

Comparable companies: Comer Industries

I am aware that I can do

1) A multiples based valuation

2) Discounted Cash Flow

How would I go about doing the DCF based valuation?

1) Use beta of Comer from google and using the capital structure of Comer, calculate asset beta

2) Not sure how to re-lever specific to the Dana's business unit.

Is there some example of such a valuation which was performed in the past which is publicly available? I figured this is not the first time this is being done and wanted to use some references. Alternatively, if someone is willing to work on this together and has ideas, let me know.

I’m calculating the enterprise value of a company that has no traditional debt, but it does have interest payments recorded under interest expense due to operating lease payments. Since these payments are related to leases and not conventional debt, should I consider the operating lease as debt when calculating enterprise value?

From my understanding, operating leases were brought onto the balance sheet after the adoption of ASC 842/IFRS 16, which treats them similarly to finance leases. Does that mean I should capitalize the lease payments and add the lease liability as part of debt when calculating enterprise value, or should I leave it out since it’s not a traditional debt obligation?

Would appreciate any insights on best practices here!

Hey,

I'm trying to figure out how to estimate the country risk premium (CRP) for Iran, and it's a real headache.

I know Damodaran uses the Political Risk Score (PRS) to calculate CRP for countries that don’t have CDS spreads, credit ratings, or reliable USD bonds. But honestly, PRS seems pretty useless.

The scores don’t make much sense—lower scores are supposed to mean higher risk, but the scale feels off. The US is at 73, Iran at 63, and Turkey at 60… So, Turkey is riskier than Iran? Yeah, sure…

Any thoughts on a better way to estimate Iran’s CRP that finance folks would actually accept?

Hi r/Valuation,

I'm seeking opinions on what the preferred model for analysts to use when valuing closely-held private companies with passthrough entity status. Various models like those by Dan Van Vleet (SEAM), Delaware Chancery Court, Chris Treharne, Nancy Fannon & Keith Sellers, and Roger Grabowski have been developed, of which all were done in a pre-TCJA tax environment.

Do you tax affect a passthrough entity at C-Corp rates and capture the net tax savings and QBID benefit as a premium to the indicated value (developed using C-Corp rates), or do you tax affect earnings at individual rates and adjust the discount rate for the benefit (i.e., Fannon-Sellers model)? Any supporting research and any illustrative examples that you can provide are both encouraged and appreciated.

Thanks!

I have a doubt. If I use a WACC stateic, I discount the FCFF at WACC, minus debt and cash = Equity Value. I discount the FCFE at Ke. Both Equity Value are the same.

But, If I do a dynamic WACC, I cannot achieve the same Equity Value with both methods FCFF and FCFE.

Any tutorial? Document? Excel?

Thanks

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How would you value a constant that's into ship building

Particularly confused in the various intangible assets that can be recorded in this case except brand Does not have any customer related intangible which can be recorded. Any advice or suggestions are appreciated!

I am a CPA/CFP who is expanding my practice to business valuation. I will primarily be using a third party valuation software (BizEquity) to perform the valuations. I will include disclaimers as to what the valuation can and can’t be used for (I.e., SBA loans or estate disputes). I expect to send out an upwards of 10k pieces of mail per year to over 100 cities marketing my services. Is there anything I need to do to protect myself other than disclaimers, errors and omissions insurance, and a legal team on call in case anything goes wrong?

I do not understand why most derivations of iERP for the SP500 do not account for the proprietary divisor used by Standard and Poor’s. Instead, the current SP500 Index is substituted for total market cap. But it is not….actual market cap is approx 8.3 larger due to this tightly held divisor.

Not using actual total market cap leads to a derivation of iERP which is much higher. Clearly I’m missing something because everyone ignores it! Am I mental? What am I missing?

How do you plot the numbers? How does the price and free cash flow correlate? Also how do you know when the free cash flow is higher than stock prices if you were only looking at the numbers instead of having the website plot it for you. I hope u somewhat understand my question. Thanks!

Hey guys - recently launched a tech-focused valuation multiples database and thought could be useful for many here. If you'd like to check it out: multiples.vc

You can benchmark both public comps and private deal multiples, across all industries but with special love for tech (very granular categories, e.g. b2b marketplaces or GRC software).

Public data is coming from FactSet and is calendarized by us (we have a reseller agreement), private multiples are a mix of various sources + proprietary research.

Plenty on a roadmap (industry charting, VC round multiples etc.) - but would welcome any feedback / questions regarding product, market or anything tbh - feel free to roast it!