Associate+Training+2006+Intrinsic+Valuation课程.pptVIP

* Section 3 Intrinsic Valuation Client Name or Project Name Client Name or Project Name Intrinsic Valuation Discounted Cash Flow Analysis Overview Uses Intrinsic Valuation of the business as a “going concern” What a potential buyer should pay for a business The DCF is used as an additional point of reference when valuing a company because it provides a theoretical benchmark, independent of market biases or control premia Advantages Theoretically, the most sound valuation method Forward looking analysis, based on cash flow (less affected by accounting rules than net income); incorporates expected operating strategy into the model Less influenced by volatile public market conditions Allows a valuation of the separate components of a business or synergies separately from the business Disadvantages Valuation is highly sensitive to underlying assumptions for cash flows (i.e., validity of projections), terminal value calculation and discount rate Terminal value often represents significant portion of total value Impervious to market dynamics and associated control premia, theoretical valuation may misrepresent what would actually be paid for a business 29 Client Name or Project Name Intrinsic Valuation Introduction to DCF Analysis DCF value is simply the present value of the projected cash flows of a business Cash flows are discounted to reflect the time value of money and the riskiness of the asset DCF analysis yields the value of the assets of a business, regardless of how it is capitalized Capitalization impacts value only through weighted average cost of capital (“WACC”) Unlevered Free Cash Flow is the cash generated By all of the assets employed in the business Without regard to capital structure and financing (thus “unlevered”) Available to all providers of capital Differentiate between definitions of Cash flow from operations Cash flow available for debt service (“levered” free cash flow) Unlevered free cash flow Key steps Identify key value drivers Use the man