RB内部估值模型教程307页.pptx

Document number1ContentExecutive Summary 执行摘要执行摘要A.Introduction to valuation B.Discount cash flow(DCF)B1.Cash flow B2.Discount rate and WACC（Weighted Average Cost of Capital的缩写。WACC代表公司整体平均资金成本，可用来衡量一个项目是否值得投资；项目的回报必须不低于WACC）B3.Terminal value 终值B4.Common DCF Q&AC.ComparableC1.Comparable methodologyC2.Listed peer comparableC3.Transaction comparableE.Real OptionF.Other valuation topicsF1.Investment process and managementF2.Data gatheringF3.Define a relevant valuation rangeF4.Sensitivity analysisF5.Industry specific valuation insightG.Appendix Document number2Executive summaryDocument number3A.Introduction to valuationDocument number4Valuation tools will typically revolve around two types of methodologies:Future Cash Flows and Historical Market PricesFinancial statements and analysts researchMacroeconomic and stock market dataCompany ValueDCF methodDiscountedDividendmethodComparable companies methodAsset-based methodsDifferentvaluation methodsManagement JudgmentReal option methodComparable transactions methodDocument number5Making a good valuation requires a good understanding of the targetThere is no black-box to make a valuation 没有暗箱没有暗箱操作做出报价操作做出报价Valuation is informationClassic methodology are mostly usedAdvanced computer systems are emergingInput data must be carefully documented(traceability)Valuation starts with a one page SWOT analysis of the targetValuation is a matter of common senseFormulas shall not replace your best judgmentKeep asking key questions about targetBe as rigorous as possible at every step of the processSource:Roland BergerDocument number6Getting started with valuationWhat is the purpose of valuating assets?What does a value mean?What are the most typical problems associated with a value?Transaction(Buy side sell side)Representation(Balance sheet portfolio)Risk assessment(Loans)A good startValue is not a priceFor who?For how long?Based on which assumptions?Source:Roland Berger123Document number7Making a good valuation requires a good understanding of the targetThere is no black-box to make a valuationValuation is informationClassic methodology are mostly usedAdvanced computer systems are emergingInput data must be carefully documented(traceability)Valuation starts with a one page SWOT analysis of the targetValuation is a matter of common senseFormulas shall not replace your best judgmentKeep asking key questions about targetBe as rigorous as possible at every step of the processSource:Roland BergerDocument number8Preliminary advice for a good valuation workKnow your target,remember that ultimately the management will make the differenceAvoid working under situation of stress,take some time to reflect on the numbersAsk for help and ideas if you meet unexpected problems use the power of the teamShare your valuation conclusions with a peerHave your valuation work checked by a valuation committee before coming back to the client12345Source:Roland BergerDocument number9Giving the right numberA company value is always a rangeThe result of a valuation should be very clear on one pageRemember that valuation is most helpful for negotiating purposesDerived from different methodologiesNot too wide to be credibleMake very clear valuation report or resume the valuation processIdentify on a separated memo the potential issueMinority investment(writing one check)Majority investment(writing multiple checks)Source:Roland BergerDocument number10Working in an uncertain environment with confidenceChoosing a growth rate for revenues is difficultExpenditures are not always well detailedSome expenditures can be also considered as assetsSensitivity to the variation of:commodities,interest rate,taxes Work on industry forecast to find an average rate by businessesTry to read more carefully financial reports and those of competitorsTry to be conservative,and prefer increasing the growth potentialRun a sensitivity analysis after modeling a“base case”Selected valuation limitationsSolutionsSource:Roland BergerDocument number11Build a knowledge baseSource:Roland BergerFinancial information is valuableKeep a library of valuation casesShare this information inside the teamBuild a transaction data baseMaintain it properly and feed it Model business caseDifficulties and key issuesEnrich the learning experience of each team memberMake each team member a contributorDocument number12Calculating a fair value is always a challengeModels are not always“stable”Terminal value and volatility have a huge impact on final resultsThe flow of corporate news does not stop!Difficult situationIdeal situation50010001500ComparablesDCFReal Options50010001500DCFReal OptionsComparablesSource:Roland BergerDocument number13The valuation equilibrium will also be affected by dynamic exogenous factors Changes in macro economic conditions will influence the valuation,in particularInterest ratesGDP growth rateTax rate and government policySpecific technical market factorsLiquidityTransaction cost Corporate IssuesShareholders pactAgency signals and management entrenchment issuesDocument number14Ultimately,valuation sensitivity will depend on the management capacity to lead value creation initiativesThe shareholder value of an investment is the difference between an acquisition premium paid in advance and the management creation initiatives taken after the dealBefore making an investment,it is vital to assess the risks and opportunities involved in depth and,if you decide to go ahead,encourage the management of the target to move quickly and effectivelyInvestmentvalueValue ofintended targetPrice ofintended targetStand-alone valuePotential value creation initiativesMarket price prior to investmentAcquisition premiumMore or less identical for listed companiesIt is this ratio which decides whether an investment is really successfulDocument number15As there is no“single value“for a company,different approaches must be used to find the right valuation rangeDifferent perspectives of valuationCompany valueComparable companies methods-“the capital markets view”Comparable listed companies Comparable transactionsSelected ratios:P/E;P/S;Revenues/EBIT,etc.Real options modelDynamic value components of investments and acquisitionsBased on Black/Scholes modelUsed for weighting risky projectsAsset based method“the divestment view”Valuing assets outside their operating use(not as going concern)Replacement values versus book valuesValue indications:comparable assets;independent appraisesDCF method-“the strategic view”Discounted cash flow of future periodsEstimation of synergies Alternative approaches:discounted dividends,discounted incomes,etc.Document number16A combination of different approaches must be used to calculate a valuation rangeComparable companies methodDCF methodComparable transactions methodAsset based methodIdentification of comparable listed companies Free cash flow planning Identification of comparable transactionsStand alone valuation ofindividual assets outside theoperating environmentSelection of multiples Calculation of WACC,Terminal value Selection of multiples Selection of comparable assetsor transactions or appraisersApplication of multiple-ranges to target company Sensitivity analysis Application of multiple-ranges to target transaction Alternative valuations givendifferent sales channelsValuation-range for target company Valuation-range for target company Valuation-range for target transactionValuation range for single assetsor portfolio of assetsValuation rangeChange to Real OptionsDocument number17B.Discount cash flow(DCF)B1.Cash flowB2.Discount rate and WACCB3.Terminal valueB4.Common DCF Q&ADocument number18The DCF method is the most commonly used valuation method especially in M&A transactionsSelected aspects of the DCF methodassumptionsjudgmentPotential areas of conflictValue drivers(interest and growth rates,currencies.)Risk-potential of the businessGood will premiumCapital expenditures Company valueStrategic value of the target company(synergy potential,capital expenditures etc.)Upper limit for bidding priceImpact of an acquisition on financial structure of acquirerStand-alone value of the companyAnticipation of strategic interest of potential acquirersLower limit for selling priceStrategic buyerStrategic sellerDocument number19The DCF method is based on three key value driversFree cash flow (to firm)Weighted average costs of capital(WACC)Terminal valueCompany value(CV)CV =+TVnFCFi(1+WACC)ii=1Document number20Value drivers in Discounted cash flow method(1)Calculation of WACCWACCre i(company)(1-t)(1-)=+re=cost of equity=i(market)+(M-i(market)i(market)=market risk free rateI(company)=interest rate of company(cost of debt)t=corporate tax rate=Beta(indicator of systematic risk)M-i(market)=market risk premium (M-i(market)=equity risk premium1-,=target capital structurewith=and(1-)=market value of equitycompany valuemarket value of debtcompany valueTax advantage of debt financingDocument number21Value drivers in Discounted cash flow method(2)Discounted Cash Flow ValuationDerivation of Free Cash FlowsEarnings before interest and taxes(EBIT)Taxes+Depreciation Change of provisions Change of net working capital=Operating cash flow+Divestments Investments=Free cash flow(to Firm)Enterprise Value=Discounted Free Cash Flow market value of interest-bearing debt+profit from the disposal of non-operating assetsFree Cashflows0123NN+1Discount of weighted average cost of capital(WACC)Reference PointFCF1FCF2FCF3.TerminalvalueDocument number22Value drivers in Discounted Cash Flow method(3)Calculation of Terminal valueTerminal valueFree cash flow of last planning yearEstimation of long term growth rate(g)Discounted TVTVFCFT+11(WACC-g)1(1+WACC)T=Be carefulThe Terminal value usually contributes between 50%and 70%to the overall company valueDocument number23Potential pitfalls of the DCF methodFree cash flow forecasting is critical for the valuationThe identification of comparable companies to select the right -factor is essentialThe market risk premium is subject to individual judgmentThe Terminal Value usually contributes 50%-70%to the overall company value.As the Terminal Value is very sensitive to the underlying parameters(e.g.perpetual growth rate),a broad range of values can be derived with only slight changes of assumptions The determination of the appropriate tax rate is criticalExamples of other critical points:-Pension liabilities according to balance sheet(mostly Germany,Austria)-Minority stakes when calculating enterprise value versus equity valueDocument number24Value of the firm Value of the firm-Value of firms debt+Value of firms cash=Value of firms equityDiscount free cash flows at the weighted average cost of capital.The result is the present value of both debt and equity,or the value of the firmDocument number25Discounted cash flow analysis provides an estimate of Intrinsic valueAnalytical processDevelop business analysisEvaluate risk and target capital structureOther adjustmentsResultsProjected annual free cash flowsEstimated terminal valueAppropriate weighted average cost of capitalRisk adjusted present value of free cash flows and terminal valueTotal firm valueNet present value of non-operating and off-balance sheet assetsValue of CommonLess debt(net of cash)and preferred stockDocument number26DCF requires in-depth business analysisIndustry outlookCompetitive positionReinvestment needsExpansion opportunitiesAnticipated industry growthMajor opportunities/risksPricing flexibilityPossible market share changesCost structureWorking capital required capital expendituresDiscretionary investmentsNew products/stores/formatDevelopment costsEconomies of scaleDocument number27The DCF method is based on three key value drivers+TVFV=ni=1FCFi(1+WACC)iFirm value(FV)1Free cash flow to firm(FCF)Weighted average costs of capital(WACC)Terminal value(TV)23The DCF Model estimates a firms value by discounting the firms expected cash flows at a rate which reflects the riskiness of the flows.Document number28B.Discount cash flow(DCF)B1.Cash flowB2.Discount rate and WACCB3.Terminal valueB4.Common DCF Q&ADocument number29Determination of cash flowsEarnings before interest and taxes(EBIT)Taxes1)+DepreciationChange of provisionsChange of net working investment=Operating cash flow+DesinvestmentsInvestments=Free cash flow(to Firm)1)Calculated figure(not the actual taxes)for a fully equity financed companyDocument number30Working cash balances+Accounts Receivable+Inventory+Other Current Assets-Accounts Payable-Accrued Liabilities-Other Current Liabilities=Net working investmentChanging net working investmentNet working investment(NWI)NWI is the net balance of the accounts in the current portion of a companys balance sheet that move with normal business activity(i.e.,move with sales)and operating decisions,but not with financing decisions.NWI represents the investment in current assets and liabilities required to support sales.NWI differs from“Working Capital”which includes other accounts that do not necessarily move with sales,such as cash and short-term debt.Source:Roland Berger AnalysisDocument number31NWI is useful because it helps us to understand the business of target companyFocus on the operating aspects of the business independent of discretionary financial decisions(e.g.,changes in cash and short-term debt)Better understand how an industry works by analyzing its NWIIdentify changes in the management of the business as well as changes in the business environmentUnderstand how a particular company works by comparing its NWI to your expectations and its competitors NWIUnderstand how a companys performance is affected by business and industry cycles and seasonalityUnderstand how management decisions(such as trade policies,accounting practices,buying and selling a business,etc.)can affect a companys NWIForecast a companys investment requirements to support future sales,which affect a companys debt capacity and valuationSource:Roland Berger AnalysisDocument number32However,there are some industries where NWI dose not applyUtilitiesBanks and insurance companiesSecurities firmsThe industry uses some unusual accounting practices due to government regulation and industry specific financial reporting standards.Banks and insurance companies do not invest in receivables and inventory as we think of them for non-financial services companies.It is difficult to distinguish current from long term assets and liabilities,given that assets are marked-to-market daily and are quite liquid.Source:Roland Berger AnalysisDocument number33Some business are sensitive to various cycles and by understanding these will have accurate forecast of NWICycles impact NWISeasonalitySeasonal companies sell a relatively high proportion of their annual sales in one season.Department stores,for example,do most of their years business during the December holiday season.Simply looking at the annual financial statements will not disclose this.Seasonality can be better determined by looking at quarterly reports.