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Session 19: First Steps on Pricing
We started the class by setting the stage of pricing companies, contrasting the pricing process with the value process. The rest of the class was our…
1 week, 2 days ago
Terminal Value Myth 5: The Terminal value ate my DCF!
In a DCF of a business, the terminal value will account for a large proportion of value and this is viewed by some as a flaw in DCF and by others as …
1 week, 2 days ago
Terminal Value Myth 4: Negative Growth Rates are impossible
In this session, I confront the myth that you cannot do a DCF with negative growth rates and that the perpetual growth model will not work if you hav…
1 week, 3 days ago
Session 18: Optimizing Financing Mix
We started this class by completing the debt trade off, by bringing in agency costs and financial flexibility, and looking at a financing hierarchy, …
1 week, 3 days ago
Terminal Value Myth 3: Growth is good, more growth is better!
In the perpetual growth model, increasing growth while holding all else constant will always increase value. That is the problem. If you follow consi…
1 week, 3 days ago
Session 18: Deconstructing Multiples
In this session, we continued with our discussion of pricing, starting with the analytics that drive PEG, PBV, EV/EBITDA and revenue multiples. Durin…
1 week, 3 days ago
Terminal Value Myth 2: As g approaches r, it is to Infinity and beyond!
Many analysts when they first see the perpetual growth model feel the call of Buzz Lightyear, since moving the growth rate towards the discount rate …
1 week, 4 days ago
Session 20: Analyzing Multiples
In this session, we continued with our discussion of pricing, starting with the analytics that drive PEG, PBV, EV/EBITDA and revenue multiples. Durin…
1 week, 4 days ago
Terminal Value Myth 1: Don't believe in forever? You can't do DCF!
In classrooms and textbooks, you are taught that there is only one way to estimate a terminal value and that is to assume cash flows grow at a consta…
1 week, 4 days ago
Session 19: Optimal Financing Mix - Determinants and Drivers
In this class, we started by tying up loose ends on the cost of capital approach, starting with why moving to the optimal changes the value of a busi…
1 week, 4 days ago