1. Comparable Company Valuation Model Introduction
Now, let's take a look at a fairly typical comps table,
we have our peer companies, the industry and location,
we're using the same exact supermarkets that we walked through when selected
good comps and eliminating bad comps. If you recall from that lesson,
the bottom four comps are not very good,
so we can either remove them outright or just make sure we don't
include them, when we calculate the average, the median,
the maximum, the minimum. So I ask that you try filling in this
comps analysis, just the first one, there's actually a separate precedent
transaction analysis below, we're not there yet, but basically,
you need to fill in the light grey shaded cells,
calculate the appropriate multiples and calculate the average, median and
so on. Again, keeping in mind those four bad comps, the bottom,
and once you calculate the average and the median, etcetera,
you can pull over the appropriate EBITDA and net income from the DCF
model tab. Then you can calculate the enterprise value, you can also reference
net debt from the DCF model tab, you can reference shares outstanding from
the DCF model tab, and you can calculate equity value and value per
share. Now, keep in mind, we are using an enterprise value multiple and
an equity value multiple, so you have to be cognizant of what
metric to use with each multiple. If you get stuck, remember you have
a PDF copy of the completed files but again,
give this a go. And then we'll walk through it together.
2. Let's practice!