Concept
Three Approaches
Income: DCF analysis. Market: comparable company multiples. Asset: fair value of net assets. Each has strengths depending on the situation.
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BARLesson 2 of 3
Valuation Methods
Key Point
DCF
Enterprise Value = PV of FCFs + Terminal Value. Terminal value often uses Gordon Growth Model: FCF(1+g)/(WACC-g). Small assumption changes cause big value swings.
Example
Comparable Analysis
Target EBITDA $5M. Peer group trades at 8x EV/EBITDA. Enterprise value ≈ $40M. Less net debt = equity value.
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Practice questions from this module to reinforce what you learned.