OCTOBER 2004
INTRODUCTION TO VALUATION METHODS USED IN INVESTMENT BANKING
STRICTLY PRIVATE AND CONFIDENTIAL
MICHIGAN BUSINESS SCHOOL
This presentation was prepared exclusively for the benefit and internal use of the JPMorgan client to whom it is directly addressed and delivered (including
such client’s subsidiaries, the “Company”) in order to assist the Company in evaluating, on a preliminary basis, the feasibility of a possible transaction or
transactions and does not carry any right of publication or disclosure, in whole or in part, to any other party. This presentation is for discussion purposes
only and is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by JPMorgan. Neither this
presentation nor any of its contents may be used for any other purpose without the prior written consent of JPMorgan.
The information in this presentation may be based upon any management forecasts provided to us and reflects prevailing conditions and our views as of this
date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification,
the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Company or which was
otherwise reviewed by us. In addition, our analyses are not and do not purport to be appraisals of the assets, stock, or business of the Company or any
other entity. JPMorgan makes no representations as to the actual value which may be received in connection with a transaction nor the legal, tax or
accounting effects of consummating a transaction.
Notwithstanding the foregoing (but subject to any applicable federal or state securities laws), JPMorgan and the Company may disclose to any and all
persons, without limitation, the tax treatment and tax structure of any transaction contemplated hereby and all materials (including opinions or other tax
analyses) relating thereto, so long as such disclosure is not made prior to the earlier of (x) public announcement of discussions relating to the transaction or
of the transaction itself and (y) the execution of an agreement to enter into the transaction.
JPMorgan’s policies prohibit employees from offering, directly or indirectly, a favorable research rating or specific price target, or offering to change a
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JPMorgan is a marketing name for investment banking businesses of J.P. Morgan Chase & Co. and its subsidiaries worldwide. Securities, syndicated loan
arranging, financial advisory and other investment banking activities are performed by J.P. Morgan Securities Inc. and its banking affiliates. JPMorgan deal
team members may be employees of any of the foregoing entities.
CONFIDENTIAL, FOR TRAINING PURPOSES ONLY
INTRODUCTION TO VALUATION METHODS USED IN INVESTMENT BANKING
Agenda
MICHIGAN BUSINESS SCHOOL
Additional valuation materials

LBO analysis
Comparable transactions analysis
Publicly traded comparable company analysis
Discounted cash flow
Valuation overview
1
1
8
17
23
28
36
INTRODUCTION TO VALUATION METHODS USED IN INVESTMENT BANKING
MICHIGAN BUSINESS SCHOOL
Research
Should our clients buy,
sell or hold positions in a
given security?
Research
Should our clients buy,
sell or hold positions in a
given security?
Acquisitions
How much should we
pay to buy the
company?
Acquisitions
How much should we
pay to buy the
company?

New business
presentations
Various applications
New business
presentations
Various applications
Fairness opinions
Is the price offered for
company/division fair
(from a financial point of
view)?
Fairness opinions
Is the price offered for
company/division fair
(from a financial point of
view)?
Divestitures
How much should we
sell our
company/division for?
Divestitures
How much should we
sell our
company/division for?
Hostile defense
Is our company
undervalued/
vulnerable to a raider?
Hostile defense
Is our company

undervalued/
vulnerable to a raider?
Public equity offerings
For how much should we
sell our company/division
in the public market?
Public equity offerings
For how much should we
sell our company/division
in the public market?
Debt offerings
What is the underlying
value of the business/
assets against which
debt is being issued?
Debt offerings
What is the underlying
value of the business/
assets against which
debt is being issued?
Valuation
Applications
2
VALUATION OVERVIEW
MICHIGAN BUSINESS SCHOOL
Valuation methodologies
 “Intrinsic”
value of
business
 Present value

of projected
free cash flows
to all providers
of capital
 “Public market
valuation”
 Value based on
multiples for
comparable
companies in
sale
transactions
 Includes
control
premium
 “Public market
valuation”
 Value based on
market trading
multiples of
comparable
companies
 How does a
firm’s financial
performance
match to
market value?
 Value based on
debt
repayment and

return on
investment
 Value to a
financial/LBO
buyer
 Liquidation analysis
 Break-up analysis
 Historical trading
performance
 Private company
valuation
 Expected IPO
valuation
 Premiums paid
analysis
Valuation
methodologies
Discounted cash
flow analysis
Publicly traded
comparable
companies
analysis
Comparable
acquisitions
analysis
Leveraged
buyout/recap
analysis
Other

3
VALUATION OVERVIEW
MICHIGAN BUSINESS SCHOOL
Approach to valuation
In arriving at a preliminary valuation for its clients, JPMorgan utilizes several methodologies that are
consistent with industry practices
In arriving at a preliminary valuation for its clients, JPMorgan utilizes several methodologies that are
consistent with industry practices
(3) Comparable
acquisition
transactions
Utilizes data from
M&A transactions
involving similar
companies
(1) Discounted
cash flow
Analyzes the
present value of
a company’s
free cash flow
(2) Publicly traded
comparable
companies
Utilizes market
trading multiples
from publicly traded
companies to derive
value
(4) Leveraged

buy out
Used to determine
range of potential
value for a company
based on maximum
leverage capacity
4
VALUATION OVERVIEW
MICHIGAN BUSINESS SCHOOL
Equity value versus enterprise value
Enterprise value = Market value of all capital invested in a business
1
(often referred to as
“transaction value”)
The value of the total enterprise: market value of equity + net debt
Equity value = Market value of the shareholders’ equity (often referred to as
“offer value”)
The market value of a company’s equity (shares outstanding x current
stock price)
Equity value = Enterprise value - net debt
2


Liabilities and shareholders’ equity
Assets
Enterprise
value
Net debt
Equity value
Enterprise

value
1
Assume book value of debt approximates market value of debt
2
Net debt equals total debt + minority interest + capitalized leases + short-term debt - cash and cash equivalents
5
VALUATION OVERVIEW
MICHIGAN BUSINESS SCHOOL
Equity value versus enterprise value (cont’d)
 Value for owners of business
 Multiples of
 Net income
 After tax cash flow
 Book value
Equity value or offer value
Equity value or offer value
 Value available to all providers of capital
 Multiples of
 Sales
 EBITDA
 EBIT
Enterprise value or transaction value
Enterprise value or transaction value
6
VALUATION OVERVIEW
MICHIGAN BUSINESS SCHOOL
Application example: Valuation summary
$60.00
$45.00
$64.60

$50.50
$34.75
$55.50$54.70
$55.00
$47.10
$37.60
$37.30
$38.00
$50.40
$19.25
10.00
20.00
30.00
40.00
50.00
$60.00
7.0x—9.0x
2004E EBITDA
7.0x—9.0x
2008E EBITDA
8.0%—11.0%
discount rate
1.6x LTM sales
9.8x LTM EBITDA
13.3x LTM EBIT
Public market
comparables
2
Precedent
comparable transactions

52-week
trading range
1
Share prices are based on 157.6 million diluted shares outstanding
2
Forecasts are based on JPMorgan research
3
Synergies assumed to be 6.0% of sales, capitalized at 8.0x
DCF analysis
Analyst price
target
With synergies
of $1,500mm
3
Current stock
price = $34.20
7.0x—9.0x
25% IRR
LTM EBITDA
LBO
Implied share price
Implied share price
7
VALUATION OVERVIEW
Agenda
MICHIGAN BUSINESS SCHOOL
Additional valuation materials
LBO analysis
Comparable transactions analysis
Publicly traded comparable company analysis

Discounted cash flow
Valuation overview
8
1
8
17
23
28
36
INTRODUCTION TO VALUATION METHODS USED IN INVESTMENT BANKING
MICHIGAN BUSINESS SCHOOL
DCF analysis: the process
Project the operating results and free cash flows of a business over the
forecast period. The typical forecast period is 10 years. However, the
range can vary from five to 20 years depending on the profitability
horizon.
Estimate the value of the business at the end of
the forecast period.
Adjust your valuation for all assets
and liabilities not accounted for in
cash flow projections.
Discount rate
Present value Determine a range of values for the
enterprise by discounting the projected
free cash flows and terminal value to the
present.
Adjustments
Projections
Terminal value
Use the weighted average cost of capital (WACC) to

determine the appropriate discount rate range.
Step 1
Step 1
Step 2
Step 2
Step 3
Step 3
Step 4
Step 4
Step 5
Step 5
9
DISCOUNTED CASH FLOW
MICHIGAN BUSINESS SCHOOL
The first step in DCF analysis is projection of unlevered
free cash flows
 Calculation of unlevered free cash flow begins with financial projections
 Comprehensive projections (i.e., fully-integrated income statement, balance
sheet and statement of cash flows) typically provide all the necessary elements
 Quality of DCF analysis is a function of the quality of projections
 Often required to “fill in the gaps”
 Confirm and validate key assumptions underlying projections
 Sensitize variables that drive projections
 Sources of projections include
 Target company’s management
 Acquiring company’s management
 Research analysts
 Bankers
10
DISCOUNTED CASH FLOW

MICHIGAN BUSINESS SCHOOL
Free cash flow is cash available to creditors and owners
after taxes and reinvestment
 Unlevered free cash flows can be forecast from a firm’s financial projections, even if
those projections include the effects of debt
 Start your calculation with EBIT (earnings before interest and taxes)

EBIT (from the income statement)

Plus: Non-tax-deductible goodwill amortization

Less: Taxes (at the marginal tax rate)

Equals: Tax-effected EBITA

Plus: Deferred taxes
1

Plus: Depreciation and any tax-deductible amortization

Less: Capital expenditures

Plus/(less): Decrease/(increase) in net working investment

Equals: Unlevered free cash flow
1
Although beyond the scope of our current discussions, you should only include actual cash taxes paid in the DCF. Depending on the firm and industry, you may want to
adjust for the non-cash (or deferred) portion of a firm’s tax provision. The tax footnote in the financial statements will give you a good idea of whether this is a
meaningful issue for your analysis
11

DISCOUNTED CASH FLOW
MICHIGAN BUSINESS SCHOOL
Projections
Key assumptions:
Deal/valuation date = 12/31/04
Marginal tax rate = 40%
Discount rate = 10%
Fiscal year ending December 31,
2001 2002 2003 2004E 2005E 2006E 2007E 2008E
Net sales $400.0 $440.0 $484.0 $532.4 $585.6 $644.2 $708.6 $779.5
EBITDA 80.0 88.0 96.8 106.5 117.1 128.8 141.7 155.9
Less: Depreciation 12.0 13.2 14.5 16.0 17.6 19.3 21.3 23.4
EBITA 68.0 74.8 82.3 90.5 99.6 109.5 120.5 132.5
Less: Taxes at marginal rate 27.2 29.9 32.9 36.2 39.8 43.8 48.2 53.0
Tax-effected EBITA $40.8 $44.9 $49.4 $54.3 $59.7 $65.7 $72.3 $79.5
Plus: Depreciation 16.0 17.6 19.3 21.3 23.4
Plus: Deferred taxes — — — — —
Less: Capital expenditures 20.0 22.0 24.2 26.6 29.3
Less: Incr./(decr.) in working capital 10.0 8.5 7.0 5.5 4.0
Unlevered free cash flow 40.3 46.8 53.8 61.4 69.6
Adjustment for deal date (40.3) — — — —
Unlevered FCF to acquirer $0.0 $46.8 $53.8 $61.4 $69.6

Memo: Discounting factor 0.0 0.5 1.5 2.5 3.5

Discounted value of unlevered FCF $0.0 $44.6 $46.7 $48.4 $49.9
Discounted value of FCF 2004P—2008P $189.6

Stand-alone projections for Company X ($ millions)
Stand-alone projections for Company X ($ millions)

JPMorgan convention is to use the
“mid-year” convention—which
assumes cash flows happen
midway during the year
12
DISCOUNTED CASH FLOW
MICHIGAN BUSINESS SCHOOL
Weighted average cost of capital (WACC) formula
 Most firms use a combination of debt and equity to fund their operations. The overall cost of
capital is the weighted average of the cost of debt and the cost of equity
WACC = r
d
* (Total debt) + r
e
* (Total equity)
(Total cap) (Total cap)
More accurately stated the formula is:
WACC = r
d
* [D *(1-T)] + r
e
* E
D+E D+E
E = market value of equity
D = market value of debt
T = marginal tax rate
r
e
= return on equity (from CAPM)
r

d
= return on debt (assumed to be weighted average cost of debt¹)
 Because interest is tax deductible, the true cost of debt is the after tax rate due to the ability
of interest expense to shield taxes. The tax rate used should be the marginal tax rate for each
specific company
¹ In order to be more accurate, the analyst should try to estimate the current market cost of debt by looking at the market cost of debt of comparable companies (with similar
credit ratings)
13
DISCOUNTED CASH FLOW
MICHIGAN BUSINESS SCHOOL


A
+ B = C






Discounted

Discounted terminal value

Firm value

Terminal value as percent

FCF



at 2008P EBITDA multiple of

at 2008P EBITDA multiple of

of total firm value
Discount

rate


2004–2008

6.0x

7.0x

8.0x


6.0x

7.0x

8.0x


6.0x 7.0x 8.0x
8%



$196.8

$687.5 $802.1 $916.7

$884.4 $999.0 $1,113.6

78% 80% 82%
9%


193.1

662.6 773.1 883.5

855.8 966.2 1,076.7

77 80 82
10%


189.6

638.9 745.4 851.8

828.4 934.9 1,041.4

77 80 82
11%



186.1

616.2 718.9 821.6

802.3 904.9 1,007.6

77 79 82
12%


182.7

594.5 693.5 792.6

777.2 876.3 975.3

76 79 81




















- D = E








Equity value

Equity value per share
1

Implied perpetuity growth rate

Net debt

at 2008P EBITDA multiple of

at 2008P EBITDA multiple of

at 2008P EBITDA multiple of

Discount

rate


12/31/04


6.0x 7.0x 8.0x

6.0X 7.0X 8.0X

6.0x 7.0x 8.0x
8%


$100.0

$784.4 $899.0 $1,013.6

$19.17 $21.97 $24.77

0.2% 1.3% 2.1%
9%


100.0

755.8 866.2 976.7


18.47 21.17 23.87

1.1 2.2 3.0
10%


100.0

728.4 834.9 941.4

17.80 20.41 23.01

2.0 3.1 3.9
11%


100.0

702.3 804.9 907.6

17.16 19.67 22.18

2.9 4.0 4.8
12%


100.0

677.2 776.3 875.3


16.55 18.97 21.39

3.8 4.9 5.8

Terminal values: The exit multiple method
Note: DCF value as of 12/31/04 based on mid-year convention
1
Based on 40.0 million basic shares outstanding and 2.0 million options with a weighted exercise price of $8.13 calculated using the treasury method
In the EBITDA exit multiple method, a multiple is applied to the final year’s EBITDA to determine a
terminal value in the final year. This terminal value is discounted to the present and added to the
PV of the cash flows
A review of the terminal value and implied perpetuity is
useful to help understand the drivers of the DCF value
14
DISCOUNTED CASH FLOW
MICHIGAN BUSINESS SCHOOL
Terminal values: The perpetuity method


A
+ B = C






Discounted



Discounted terminal value

Firm value

Terminal value as percent

FCF


at perpetuity growth rate of

at perpetuity growth rate of

of total firm value
Discount

rate


2004–2008


2.5% 3.0% 3.5%

2.5% 3.0% 3.5%

2.5% 3.0% 3.5%
8%



$196.8


$991.0 $1,095.4 $1,223.0

$1,187.8 $1,292.2 $1,419.8

83% 85% 86%
9%


193.1


811.9 883.8 968.9

1,005.0 1,077.0 1,162.0

81 82 83
10%


189.6


681.5 733.7 794.0

871.1 923.3 983.6

78 79 81

11%


186.1


582.6 622.0 666.7

768.7 808.1 852.8

76 77 78
12%


182.7


505.1 535.8 570.1

687.9 718.5 752.8

73 75 76




















- D = E








Equity value

Equity value per share
1

Implied EBITDA exit multiple

Net debt



at perpetuity growth rate of

at perpetuity growth rate of

at perpetuity growth rate of
Discount

rate


12/31/04


2.5% 3.0% 3.5%

2.5% 3.0% 3.5%

2.5% 3.0% 3.5%
8%


$100.0

$1,087.8 $1,192.2 $1,319.8

$26.59 $29.14 $32.26

8.6x 9.6x 10.7x
9%



100.0

905.0 977.0 1,062.0

22.12 23.88 25.96

7.4 8.0 8.8
10%


100.0

771.1 823.3 883.6

18.84 20.12 21.59

6.4 6.9 7.5
11%


100.0

668.7 708.1 752.8

16.34 17.31 18.40

5.7 6.1 6.5
12%



100.0

587.9 618.5 652.8

14.37 15.12 15.95

5.1 5.4 5.8

Note: DCF value as of 12/31/04 based on mid-year convention
1
Based on 40.0 million basic shares outstanding and 2.0 million options with a weighted exercise price of $8.13 calculated using the treasury method
In the perpetuity method the final year cash flow is used to determine the terminal value of the
cash flows
The PV of a growing perpetuity in year 5 is:
FCF * (1+g)
(r - g)
Thus, this PV 5 years forward must then be
discounted back to the valuation date
15
DISCOUNTED CASH FLOW
MICHIGAN BUSINESS SCHOOL
Concluding DCF remarks
 DCF analysis is a key valuation methodology
 Three key variables
 Projections/relevant and incremental cash flows (unlevered free cash flow)
 Weighted average cost of capital (discount rate)
 Residual value at end of the projection period (terminal value)
 Remember
 Validate and test projection assumptions

 Determine appropriate cash flow stream
 Utilize appropriate cost of capital approach
 Carefully consider all variables in the calculation of the discount rate
 Thoughtfully consider terminal value methodology
 Sensitize appropriately (base projection variables, synergies, discount rates,
terminal values, etc.)
 Footnote assumptions in detail
 Think about other value enhancers and detractors
— NOLs
— Options, warrants, etc.
Check it with a calculator!
16
DISCOUNTED CASH FLOW
Agenda
MICHIGAN BUSINESS SCHOOL
Additional valuation materials
LBO analysis
Comparable transactions analysis
Publicly traded comparable company analysis
Discounted cash flow
Valuation overview
17
1
8
17
23
28
36
INTRODUCTION TO VALUATION METHODS USED IN INVESTMENT BANKING
MICHIGAN BUSINESS SCHOOL

Overview
 Comparable company analysis values a company by reference to other publicly-
traded companies with similar operating and financial characteristics. It compares
the public company value with operating statistics to calculate the valuation
multiple
 Comparable companies values do not incorporate the “control” premiums reflected
in comparable acquisitions. Depending on market conditions, the comparable
companies' multiples may or may not be higher than comparable acquisitions’
multiples
 The trick to comparable company analysis is to find good comparables
 The bad news: no two companies are really comparable
 The good news: it doesn't matter, because everybody else (equity research
analysts, traders, arbs, etc.) has to deal with the same problem
 Once you have chosen the comparable companies, calculate the implied value of
your company by multiplying the company’s historical and projected sales, EBIT,
EBITDA, net income, book value and other key operating statistics by the respective
comparable company multiples
18
PUBLICLY TRADED COMPARABLE COMPANY ANALYSIS
MICHIGAN BUSINESS SCHOOL
Identifying the right peer group
 The key to compiling a trading comparables analysis is to identify companies that are considered comparable
and that closely resemble the composition and function of the Company you are evaluating
 SIC code search
 Research reports
 10K
 To find comparable companies, look for companies with similar characteristics to those of the business being
valued
 Industry
 Product

 Markets
 Distribution channels
 Customers
 Seasonality
 Cyclicality
 Size
 Leverage
 Margins
 Growth prospects
 Shareholder base
Operational Financial
19
PUBLICLY TRADED COMPARABLE COMPANY ANALYSIS
MICHIGAN BUSINESS SCHOOL
Choosing the right metric
 Even with standard metrics, certain multiples are more relevant for some industries than others
 For many industries, FV/EBITDA multiples are the most common trading metric (e.g.
Industrials, Transportation, Distribution, etc.)
 For other industries, P/E multiples are more widely followed (Pharmaceuticals, Restaurants,
Biotech, etc.)
 Reading analyst reports will help you understand the metrics analysts use to value the sector
and the industry
 Certain sectors have unique metrics
Telecommunications Natural resources Retail/Real estate
 Enterprise value to
— Run rate revenue (LQA)
— 2000 to 2002 revenue
— Net PPE (Latest 10-Q)
— Route miles (Latest 10-Q)
— Fiber miles (Latest 10-Q)

— Access lines (Latest 10-Q
and 1-year forward)
 Enterprise value to
— Pretax Sec10
— EBITDAX
— Reserves
— Production
 Equity value
— Discretionary cash flow
 Enterprise value
— Square footage
— EBITDAR
20
PUBLICLY TRADED COMPARABLE COMPANY ANALYSIS
MICHIGAN BUSINESS SCHOOL
FV/EBITDA
4
P/E
5

Company
Share
price
1

% of
52-wk. high
Equity
value
2


Firm value
3
2004E 2005E 2004E 2005E LTGR
5
2004E PEG
Large capitalization
WellPoint $111.05 94.0% $17,926 $19,164 8.9x 7.8x 15.6x 13.6x 15.0% 1.04x
Aetna 87.40 91.9% 14,598 16,211 8.7x 7.8x 12.9x 11.3x 15.0% 0.86x
Anthem 87.35 92.0% 12,264 13,927 7.4x 6.8x 14.0x 12.2x 15.0% 0.94x
Cigna 65.22 92.5% 9,273 10,773 7.7x 7.4x 11.3x 10.2x 10.0% 1.13x
Mean 92.6%


8.2x 7.5x 13.5x 11.8x 13.8% 0.99x
Median 92.2%


8.2x 7.6x 13.5x 11.7x 15.0% 0.99x
Mid capitalization
Oxford $53.62 88.1% $4,561 $4,965 7.8x 7.3x 12.0x 10.9x 12.0% 1.00x
PacifiCare 38.25 89.5% 3,752 4,372 7.4x 6.5x 12.5x 10.5x 13.0% 0.96x
Coventry 42.63 90.2% 3,979 4,149 8.9x 7.7x 13.1x 11.4x 15.0% 0.87x
Humana 18.10 75.4% 2,973 3,616 6.8x 6.1x 11.1x 10.1x 13.5% 0.82x
Health Net 26.05 72.8% 3,028 3,427 5.4x 4.8x 9.3x 8.1x 13.5% 0.69x
WellChoice 36.75 94.5% 3,079 3,128 7.3x 6.4x 13.1x 11.5x 15.0% 0.88x
Mean 85.1%


7.3x 6.5x 11.9x 10.4x 13.7% 0.87x

Median 88.8%


7.3x 6.5x 12.3x 10.7x 13.5% 0.87x
Small c apitalization
Sierra $35.98 92.7% $1,322 $1,324 8.0x 7.7x 13.3x 11.8x 15.0% 0.89x
American Medical Security 25.74 92.3% 397 427 7.1x 6.5x 12.0x 11.0x 15.0% 0.80x
Median 92.5%


7.5x 7.1x 12.6x 11.4x 15.0% 0.84x











Blended mean 90.3%


7.6x 6.9x 12.7x 11.2x 14.2% 0.90x
Blended median 92.4%


7.6x 7.1x 13.0x 11.4x 15.0% 0.88x












UnitedHealth Group $65.41 95.5% $43,979 $46,379 11.2x 9.9x 17.4x 15.0x 17.0% 1.02x
$ millions, except for per share data
$ millions, except for per share data
1
As of 4/16/04
2
Based on diluted shares outstanding using the treasury stock method
3
Calculated using equity value plus debt
4
Based on equity analyst research reports; includes investment income
5
Based on I/B/E/S
Managed care trading comparables
21
PUBLICLY TRADED COMPARABLE COMPANY ANALYSIS
MICHIGAN BUSINESS SCHOOL
Concluding remarks on comparable companies
 Trading comps are an important valuation metric for a number of reasons

 Benchmark of how the equity market is valuing the company stand alone and relative to its peers
 Every CEO knows his own multiples and those of his peers
 Key steps for comps
 Choose the right comparable companies and valuation metrics to focus on
 Spread the comps correctly
 Use the comps to determine a valuation range
 Getting the comps correct
 Ensure you have correctly captured the equity and net debt components
— Diluted shares (includes options using the treasury method and convertibles if in the money)
— Net debt includes preferreds, out of the money converts, capital leases, etc.
 Ensure your income statement projections are uniform across your comps
— Adjust for extraordinary items and one time charges
— Calendarize so that projections reflect the same time periods
— Check analyst projections to make sure they are treating all expense components the same
across the comps (e.g., amortization of intangibles)
 Determining a value range
 Thoughtfully consider the multiple range—using the mean/median is not thoughtful
 Calculate the value correctly (Firm value versus Equity value issue)
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PUBLICLY TRADED COMPARABLE COMPANY ANALYSIS
Agenda
MICHIGAN BUSINESS SCHOOL
Additional valuation materials
LBO analysis
Comparable transactions analysis
Publicly traded comparable company analysis
Discounted cash flow
Valuation overview
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INTRODUCTION TO VALUATION METHODS USED IN INVESTMENT BANKING