Investment banking
Valuation summary and football field. Hieu Van Nguyen
This is the page a sell-side or fairness analysis builds toward. The company is invented. Change the offer price and see the premium to today's price, to the recent average and to the 52-week high, and the multiples the offer implies. Then see where that offer sits against each valuation method.
What this shows
Trading comparables with the usual statistics: high, 75th percentile, median, 25th percentile and low
Precedent transactions and the premiums paid in comparable public deals
A discounted cash flow range from a growth and discount rate grid
A football field that puts every method and the offer price on one scale
Sample build: valuation pack for an invented company
Is an offer price fair? This pack values an invented public company four ways, then tests an invented offer against each range. Move the offer price, leave comparable companies out, filter the deals and change the DCF, then read the football field.
Synthetic inputs for illustration. Not data from any employer.
What to try
- Drag the offer price and watch the premium, the multiples and the football field change together.
- Open each tab to see one method, then come back to the football field.
Premium to current price
33.2%
Current price $18.40
Equity value at the offer
$2,011M
$1,491M at the current price
Enterprise value at the offer
$2,211M
$1,691M at the current price
EV / last-year EBITDA
11.6x
8.9x at the current price
What to try
- Drag the offer price above and watch the share count change: each option block counts only once the price is above its strike.
- Compare the two columns in the bridge: the same company at today's price and at the offer.
- Lower the offer below the current price and the premiums turn negative.
Company inputs (invented)
Last-year revenue is $1,000M and last-year EBITDA is $190M. The next two years come from the management plan on the DCF tab.
| At current price | At offer price | |
|---|---|---|
| Share price | $18.40 | $24.50 |
| Basic shares (millions) | 80.00 | 80.00 |
| Net new shares from options and warrants (millions) | 1.04 | 2.09 |
| Diluted shares (millions) | 81.04 | 82.09 |
| Equity value | $1,491.2M | $2,011.2M |
| Plus: debt | $320.0M | $320.0M |
| Plus: other claims (preferred stock and minority interests) | $30.0M | $30.0M |
| Less: cash | -$150.0M | -$150.0M |
| Enterprise value | $1,691.2M | $2,211.3M |
| EV / revenue, last year | 1.69x | 2.21x |
| EV / revenue, next year | 1.57x | 2.05x |
| EV / revenue, year after | 1.46x | 1.90x |
| EV / EBITDA, last year | 8.9x | 11.6x |
| EV / EBITDA, next year | 8.0x | 10.5x |
| EV / EBITDA, year after | 7.3x | 9.5x |
Enterprise value is the price of the whole business, debt included, before the cash it holds. It is equity value plus debt and other claims, less cash.
| Option or warrant block | Shares | Strike | Net at current | Issued at offer | Bought back at offer | Net at offer |
|---|---|---|---|---|---|---|
| Options, tranche 1 | 3.00 | $12.00 | 1.04 | 3.00 | 1.47 | 1.53 |
| Options, tranche 2 | 2.50 | $20.00 | 0.00 | 2.50 | 2.04 | 0.46 |
| Warrants | 1.00 | $22.00 | 0.00 | 1.00 | 0.90 | 0.10 |
| Options, tranche 3 | 1.50 | $28.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 8.00 | 1.04 | 6.50 | 4.41 | 2.09 |
How a block works: if the price is above the strike the holders exercise and pay count x strike to the company, and the company uses that cash to buy its own shares back at the offer price. Block one at the offer: 3.00 x $12.00 / $24.50 = 1.47 shares bought back, so 1.53 are added.
| Reference | Price | Offer premium |
|---|---|---|
| Current price | $18.40 | 33.2% |
| One week before | $18.10 | 35.4% |
| Four weeks before | $17.20 | 42.4% |
| Unaffected price | $17.50 | 40.0% |
| 52-week high | $21.30 | 15.0% |
| 52-week low | $13.90 | 76.3% |
What to try
- Untick Peer H, the micro-cap with a 19.0x multiple, and watch the median and the range fall.
- Untick Peer G, which sells electrical parts, and watch the median rise.
- Switch the basis to next-year EBITDA and see how much the answer depends on the metric chosen.
| In | Peer | Market cap | Enterprise value | EV / revenue, last year | EV / revenue, next year | EV / EBITDA, last year | EV / EBITDA, next year | Revenue growth | EBITDA margin |
|---|---|---|---|---|---|---|---|---|---|
| Peer AProcess sensors, large | $2,900M | $3,300M | 2.20x | 2.04x | 11.0x | 10.0x | 8.0% | 20.0% | |
| Peer BTest and measurement | $2,650M | $3,000M | 2.50x | 2.33x | 12.5x | 11.1x | 7.5% | 20.0% | |
| Peer CIndustrial automation, large | $3,500M | $4,000M | 2.00x | 1.90x | 10.0x | 9.3x | 5.0% | 20.0% | |
| Peer DPrecision controls | $1,700M | $1,950M | 3.00x | 2.73x | 13.0x | 11.5x | 10.0% | 23.1% | |
| Peer EFlow instruments | $1,600M | $1,900M | 1.90x | 1.81x | 9.5x | 8.8x | 5.0% | 20.0% | |
| Peer FCalibration services | $1,200M | $1,380M | 2.88x | 2.60x | 11.5x | 10.0x | 10.4% | 25.0% | |
| Peer GElectrical distribution (different business) | $3,000M | $3,500M | 0.70x | 0.68x | 7.0x | 6.8x | 3.0% | 10.0% | |
| Peer HMicro-cap sensors (much smaller) | $340M | $380M | 3.80x | 2.71x | 19.0x | 12.7x | 40.0% | 20.0% | |
| Maximum | 3.80x | 2.73x | 19.0x | 12.7x | 40.0% | 25.0% | |||
| 75th percentile | 2.91x | 2.63x | 12.6x | 11.2x | 10.1% | 20.8% | |||
| Mean | 2.37x | 2.10x | 11.7x | 10.0x | 11.1% | 19.8% | |||
| Median | 2.35x | 2.18x | 11.3x | 10.0x | 7.8% | 20.0% | |||
| 25th percentile | 1.98x | 1.88x | 9.9x | 9.2x | 5.0% | 20.0% | |||
| Minimum | 0.70x | 0.68x | 7.0x | 6.8x | 3.0% | 10.0% | |||
Scrubbing means leaving a peer out of the statistics because it is too different to compare, for example much smaller or in another business. The statistics use only the ticked peers.
| Low | High | |
|---|---|---|
| Multiple | 9.88x | 12.63x |
| Times the target's last-year EBITDA | $190.0M | $190.0M |
| Enterprise value | $1,876.3M | $2,398.8M |
| Equity value (after debt, other claims and cash) | $1,676.3M | $2,198.8M |
| Value per share (after option dilution) | $20.61 | $26.67 |
| Same range with every peer included | $20.61 | $26.67 |
What the scrub changed
No peer is scrubbed yet. Untick one in the table to see what it does to the median, the range and the value per share.
What to try
- Switch to sponsor buyers only and watch the multiples and premiums come down.
- Pick deals of $2B and over, then add a buyer type. The set shrinks, so the percentiles lean on fewer deals.
- Raise the offer price at the top of the page and see where its premium lands against the range of premiums paid.
| Announced | Buyer | Target | Enterprise value | EV / revenue | EV / EBITDA | Premium, day before | Premium, 4-week average |
|---|---|---|---|---|---|---|---|
| Mar 2022 | Strategic | Process sensors | $2,400M | 2.40x | 12.0x | 28% | 32% |
| Jun 2022 | Sponsor | Test equipment | $1,500M | 2.50x | 13.6x | 35% | 40% |
| Nov 2022 | Strategic | Flow control | $900M | 1.80x | 10.6x | 22% | 26% |
| Feb 2023 | Strategic | Automation systems | $3,600M | 3.00x | 15.0x | 41% | 45% |
| May 2023 | Sponsor | Calibration services | $700M | 2.00x | 10.0x | 30% | 33% |
| Sep 2023 | Strategic | Precision controls | $2,000M | 2.22x | 13.3x | 25% | 29% |
| Jan 2024 | Sponsor | Measurement instruments | $4,200M | 2.40x | 12.0x | 33% | 38% |
| Apr 2024 | Strategic | Industrial sensors | $1,200M | 2.50x | 15.0x | 38% | 42% |
| Aug 2025 | Strategic | Test and measurement | $5,500M | 2.50x | 12.5x | 20% | 24% |
| Feb 2026 | Sponsor | Flow instruments | $800M | 2.00x | 10.7x | 27% | 30% |
| Maximum | 3.00x | 15.0x | 41.0% | 45.0% | |||
| 75th percentile | 2.50x | 13.6x | 34.5% | 39.5% | |||
| Mean | 2.33x | 12.5x | 29.9% | 33.9% | |||
| Median | 2.40x | 12.3x | 29.0% | 32.5% | |||
| 25th percentile | 2.06x | 11.0x | 25.5% | 29.3% | |||
| Minimum | 1.80x | 10.0x | 20.0% | 24.0% |
A strategic buyer is an operating company. A sponsor is an investment fund. The premium paid is how far above the target's share price the buyer paid.
| Low | High | |
|---|---|---|
| Multiple | 11.00x | 13.56x |
| Times the target's last-year EBITDA | $190.0M | $190.0M |
| Enterprise value | $2,090.0M | $2,576.5M |
| Equity value | $1,890.0M | $2,376.5M |
| Value per share | $23.10 | $28.71 |
| Low | High | |
|---|---|---|
| Premium to the day before | 25.5% | 34.5% |
| Unaffected price | $17.50 | $17.50 |
| Price at that premium | $21.96 | $23.54 |
Where the offer sits
The offer is a 40.0% premium to the unaffected price. That is above the 25.5% to 34.5% range of premiums paid in this set of deals.
The unaffected price is the share price before news of a sale reached the market. Premiums are measured against it so that a leak does not inflate the base.
What to try
- Raise the discount rate and watch every cell in the grid fall. Raise growth and they rise.
- Cut the margin by one point and see how far the football field bar moves.
- Look at the terminal value share: most of a DCF value usually sits beyond the forecast years.
DCF controls
The two changes move the DCF only. The comparables and precedents are applied to the unchanged management plan. Cash flows are discounted at the end of each year.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $1,080.0M | $1,161.0M | $1,242.3M | $1,316.8M | $1,382.6M |
| Revenue growth | 8.0% | 7.5% | 7.0% | 6.0% | 5.0% |
| EBITDA | $210.6M | $232.2M | $254.7M | $276.5M | $290.4M |
| EBITDA margin | 19.5% | 20.0% | 20.5% | 21.0% | 21.0% |
| EBIT (EBITDA less depreciation and amortization) | $167.4M | $185.8M | $205.0M | $223.9M | $235.0M |
| Less: tax on EBIT | -$41.8M | -$46.4M | -$51.2M | -$56.0M | -$58.8M |
| Less: capital spending | -$48.6M | -$52.2M | -$55.9M | -$59.3M | -$62.2M |
| Less: working capital added | -$12.0M | -$12.2M | -$12.2M | -$11.2M | -$9.9M |
| Free cash flow | $108.2M | $121.4M | $135.3M | $150.1M | $159.5M |
| Discount factor | 0.9174 | 0.8417 | 0.7722 | 0.7084 | 0.6499 |
| Present value | $99.2M | $102.2M | $104.5M | $106.4M | $103.7M |
| Base case | |
|---|---|
| Present value of years 1 to 5 | $515.9M |
| Terminal value, at the end of year 5 | $2,515.2M |
| Present value of the terminal value | $1,634.7M |
| Enterprise value | $2,150.6M |
| Less: debt and other claims, plus cash | -$200.0M |
| Equity value | $1,950.6M |
| Value per share, after option dilution | $23.80 |
| Terminal value as a share of enterprise value | 76% |
| Discount rate | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 8.00% | $24.67 | $26.40 | $28.45 | $30.87 | $33.83 |
| 8.50% | $22.77 | $24.23 | $25.93 | $27.95 | $30.33 |
| 9.00% | $21.11 | $22.36 | $23.80 | $25.47 | $27.45 |
| 9.50% | $19.64 | $20.73 | $21.97 | $23.38 | $25.02 |
| 10.00% | $18.32 | $19.28 | $20.37 | $21.58 | $22.97 |
The outlined center cell is the base case. The football field uses the two corners one step either side of it: $20.73 at a discount rate of 9.50% with growth of 2.00%, and $27.95 at 8.50% with growth of 3.00%.
Terminal value is the year 5 cash flow grown once and divided by the gap between the discount rate and growth. At the base case that is 15.8x the year 5 cash flow.
What to try
- Drag the offer price at the top of the page and watch the solid line cross the bars. The conclusion below rewrites itself.
- Scrub a peer on the comparables tab, or filter the deals, and see which bars move.
- Raise the DCF discount rate and see the green bar slide left.
| Method | Low | High | Offer is |
|---|---|---|---|
| 52-week trading range | $13.90 | $21.30 | Above |
| Trading comparables | $20.61 | $26.67 | Inside |
| Precedent transactions | $23.10 | $28.71 | Inside |
| Premiums paid | $21.96 | $23.54 | Above |
| Discounted cash flow | $20.73 | $27.95 | Inside |
| Current price | $18.40 | ||
| Offer price | $24.50 |
- 52-week trading range: Lowest and highest closing price.
- Trading comparables: EV / EBITDA, last year, 25th to 75th percentile.
- Precedent transactions: EV / EBITDA, last year, 25th to 75th percentile.
- Premiums paid: Premium to the day-before price, 25th to 75th percentile, on the unaffected price.
- Discounted cash flow: Discount rate plus or minus half a point, growth plus or minus half a point.
Conclusion from the numbers
At $24.50 the offer is above the 52-week range and the premiums paid range. It is inside the trading comparables range, the precedent transactions range and the DCF range.
The offer is closest to the top of the trading comparables range, $2.17 below its high of $26.67.
A price above $24.50 is supported only by the top of the precedent transactions range, up to $28.71. That would need a multiple near the 75th percentile of recent deals, 13.6x last-year EBITDA.
At $24.50 a share the offer is a 33.2% premium to the current price and values the company at $2,211 million, or 11.6x last-year EBITDA. It is inside 3 of 5 ranges, above 2 and below 0.
How I use it
Showing a board whether an offer sits inside or outside the range the methods support
Explaining which method moves the answer and why
Cleaning the comparable set so one odd company does not move the median