Valuation Analyst Expert valuation agent that determines fair value of companies and assets using multiple methodologies. Specializes in DCF analysis, comparable company analysis, precedent transactions, and asset-based valuation. Provides comprehensive valuation for investment decisions, M&A, and strategic planning. This skill applies rigorous valuation frameworks used by investment banks, private equity firms, and corporate finance professionals. Perfect for startup valuations, M&A analysis, investment decisions, and fairness opinions. Core Workflows Workflow 1: Discounted Cash Flow (DCF) Valuation Objective: Value company based on projected future cash flows Steps: Financial Projections (5-10 years) Revenue Projections: Historical growth analysis Market size and share Segment-level forecasts Growth rate deceleration Profitability Projections: Gross margin trends Operating margin expansion SG&A leverage Target margins at maturity Capital Requirements: CapEx as % of revenue Working capital changes D&A schedule Free Cash Flow Calculation EBIT (Earnings Before Interest & Taxes) - Taxes (EBIT × Tax Rate) = NOPAT (Net Operating Profit After Tax) + Depreciation & Amortization - Capital Expenditures - Change in Working Capital = Unlevered Free Cash Flow (UFCF) Discount Rate (WACC) Cost of Equity (CAPM): Ke = Rf + β × (Rm - Rf) Where: Rf = Risk-free rate (10-year Treasury) β = Levered beta Rm - Rf = Equity risk premium (5-7%) For private companies, add size premium (2-6%) Cost of Debt: Kd = Interest Rate × (1 - Tax Rate) WACC Calculation: WACC = (E/V × Ke) + (D/V × Kd) E = Market value of equity D = Market value of debt V = E + D Terminal Value Perpetuity Growth Method: TV = FCF(final year) × (1 + g) / (WACC - g) g = Terminal growth rate (typically 2-3%) Exit Multiple Method: TV = EBITDA(final year) × Exit Multiple Exit multiple based on comparables Enterprise Value Calculation Enterprise Value = Σ(FCF / (1 + WACC)^t) + TV / (1 + WACC)^n t = year number n = final projection year Equity Value Bridge Enterprise Value - Total Debt - Preferred Stock - Minority Interest + Cash & Equivalents + Non-operating Assets = Equity Value Per Share Value = Equity Value / Diluted Shares Sensitivity Analysis WACC vs Terminal Growth matrix Revenue growth sensitivity Margin sensitivity Multiple sensitivity Deliverable: DCF valuation with sensitivity tables Workflow 2: Comparable Company Analysis Objective: Value company using trading multiples of similar public companies Steps: Select Comparable Companies Same industry/sector Similar business model Comparable size (revenue, market cap) Similar growth profile Geographic relevance Minimum 5-7 comps preferred Gather Market Data Stock price (current) Shares outstanding (diluted) Market capitalization Total debt Cash and equivalents Minority interest Calculate Enterprise Value Market Cap = Share Price × Diluted Shares Enterprise Value = Market Cap + Debt - Cash + Minority Interest Gather Financial Metrics LTM (Last Twelve Months): Revenue EBITDA EBIT Net Income EPS NTM (Next Twelve Months) estimates: Revenue EBITDA EPS Calculate Trading Multiples Multiple Formula When to Use EV/Revenue EV / Revenue High growth, negative EBITDA EV/EBITDA EV / EBITDA Most common, capital intensive EV/EBIT EV / EBIT D&A differs materially P/E Price / EPS Mature, profitable P/B Price / Book Financial institutions PEG P/E / Growth Growth-adjusted comparison Analyze and Select Multiples Calculate mean, median, range Identify outliers Consider premium/discount factors Select appropriate multiple range Apply to Target Company Enterprise Value = Target Metric × Selected Multiple Example: Target EBITDA = $50M Median EV/EBITDA = 12.0x Implied EV = $600M Valuation Range Low (25th percentile multiple) Mid (median multiple) High (75th percentile multiple) Deliverable: Comparable company analysis with valuation range Workflow 3: Precedent Transaction Analysis Objective: Value company using M&A transaction multiples Steps: Identify Relevant Transactions Same industry Similar deal size Recent (last 3-5 years) Similar deal structure Minimum 5-7 transactions Gather Transaction Details Announcement date Acquirer and target Deal value Deal structure (stock/cash) Strategic vs financial buyer Control premium paid Calculate Transaction Multiples EV/Revenue at time of deal EV/EBITDA at time of deal EV/EBIT at time of deal Premium to trading price Adjust for Context Market conditions at time of deal Synergy expectations Competitive bidding situation Distressed vs strategic deals Apply to Target Transaction EV = Target Metric × Transaction Multiple Consider Control Premium Typical premium: 20-40% over trading Adjust for minority vs control stakes Strategic vs financial buyers Deliverable: Precedent transaction analysis with implied value range Workflow 4: Startup/Private Company Valuation Objective: Value early-stage or private company Steps: Valuation Method Selection Stage Primary Methods Pre-revenue Scorecard, Berkus, Risk Factor Early revenue Revenue multiples, DCF (if possible) Growth stage Revenue multiples, DCF Late stage DCF, comps, precedent transactions Revenue Multiple Approach Select Comparable Multiples: Public SaaS: 5-15x revenue Marketplace: 1-5x GMV, 5-15x revenue E-commerce: 0.5-2x revenue Apply Discount: Illiquidity discount: 20-35% Size discount: 10-30% Stage discount: varies Calculation: Value = Revenue × Multiple × (1 - Discounts) Venture Capital Method Exit Value = Projected Revenue × Exit Multiple Pre-money Value = Exit Value / Target Return Example: Year 5 Revenue = $100M Exit Multiple = 6x Exit Value = $600M Target Return = 10x Current Value = $60M Scorecard Method (Pre-revenue) Average pre-money for stage/region Score on factors (±50%): Team strength Market opportunity Product/technology Competitive environment Partnerships Need for financing Multiply base by weighted factors Cap Table Implications Pre-money vs post-money Dilution calculation Option pool sizing Liquidation preferences Deliverable: Private company valuation with methodology explanation Workflow 5: Sum-of-the-Parts (SOTP) Valuation Objective: Value multi-segment company by valuing each segment separately Steps: Segment Identification Business segments from filings Geographic segments Product line segments Operational vs non-operating assets Segment Financial Separation Segment revenue Segment EBITDA Segment assets Corporate overhead allocation Segment Valuation Value each segment using appropriate method: Growth segment: Revenue multiple or DCF Mature segment: EBITDA multiple Asset-heavy: Asset-based Use segment-specific comparables Corporate Adjustments Corporate overhead (capitalize as liability) Shared services Intercompany eliminations Net debt allocation Sum of Parts Segment A Value: $X + Segment B Value: $Y + Segment C Value: $Z - Corporate Overhead Value: ($W) - Net Debt: ($D) = Total Equity Value Conglomerate Discount Typical discount: 10-25% Reasons: complexity, capital allocation Consider break-up value Deliverable: SOTP valuation with segment breakdown Quick Reference Action Command/Trigger DCF valuation "Perform DCF analysis" Comparables "Value using comparable companies" Transactions "Analyze precedent transactions" Startup value "Value this startup" SOTP "Sum-of-the-parts valuation" Full analysis "Complete valuation analysis" Valuation Multiples Reference By Industry (EV/EBITDA Ranges) Industry Range Notes Software/SaaS 15-30x Revenue multiples also common Healthcare 10-15x Varies by sub-sector Consumer Retail 6-10x Location matters Manufacturing 6-10x Asset intensity varies Financial Services P/B or P/E Book value focus Energy 4-8x Commodity sensitive Real Estate Cap rate NOI based Media 8-15x Content value matters SaaS Revenue Multiples Growth Rate ARR Multiple < 20% 3-6x 20-40% 6-10x 40-60% 10-15x 60-100% 15-25x

100% 25x+ Common Adjustments Adjustment Application Illiquidity discount Private companies (20-35%) Control premium Acquisitions (20-40%) Size premium Small companies (add to WACC) Country risk Emerging markets (add to WACC) Minority discount Non-control stakes (15-30%) DCF Template

DCF Valuation: [Company Name]

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WACC Calculation Cost of Equity: % Cost of Debt (after-tax): % WACC: %

Projections ($M) | | Y1 | Y2 | Y3 | Y4 | Y5 | Terminal | |-|----|----|----|----|----| ---------| | Revenue | | | | | | | | EBITDA | | | | | | | | EBIT | | | | | | | | Taxes | | | | | | | | NOPAT | | | | | | | | + D&A | | | | | | | | - CapEx | | | | | | | | - Δ WC | | | | | | | | FCF | | | | | | | | Discount Factor | | | | | | | | PV of FCF | | | | | | |

Valuation Summary Sum of PV of FCF: $ Terminal Value: $ PV of Terminal Value: $ Enterprise Value: $ - Net Debt: $ Equity Value: $ Shares Outstanding: Value per Share: $

Sensitivity Analysis [WACC vs Terminal Growth matrix] Best Practices Methodology Selection Use multiple methods for triangulation Weight methods by applicability Consider data availability Match to purpose (minority, control, etc.) Assumption Setting Ground assumptions in data Be explicit about sources Test sensitivity Document reasoning Presentation Show range, not point estimate Include key assumptions Provide sensitivity analysis Compare methods Integration with Other Skills Use with financial-analyst : Financial statement analysis Use with investment-analyzer : Investment decision support Use with revenue-modeler : Revenue projection inputs Use with contract-analyzer : Deal term analysis Use with compliance-checker : Regulatory considerations Common Pitfalls to Avoid Single methodology: Use multiple approaches Circular references: WACC and capital structure Terminal value dominance: Should be < 75% of value Hockey stick projections: Reality check growth rates Ignoring working capital: Significant for many businesses Wrong peer selection: Comparability matters Stale data: Use current market data Overcomplication: Simpler models often more reliable

valuation analyst

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