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The discerning valuation analysis is a model the contains and reconciles the following three discounted cash flow models: (a) The Free Cash Flow to Firm model (FCFF); (b) The Free Cash Flow to Equity model (FCFE); and (c) The Discounted Economic Profits (DEP) or Economic Value-Added model (EVA).  The DEP / EVA model is increasingly being utilized by many private equity, investment banking, and corporate finance firms in the USA as well as international industry “consolidators”.  The discerning valuation analysis model incorporates into one model the DEP / EVA model (corporate finance framework) with the traditional FCFE and FCFF models typically utilized by CBVs.

The model / analysis allows important insights and transparency via the inter-play of the following variable factors for CBVs working on fairness opinions or in the above noted firms.  An analysis / comparison of ROIC and WACC and the impact on value creation (the investment decision for acquiring a business);

  • Economic profits and the impact on economic value;
  • Sales growth over the projected life cycle of the business;
  • Operating capital employed;
  • EBITDA margins;
  • Net reinvestment rates;
  • The impact of leverage and corporate income taxes associated with Economic Value Added; and,
  • Operating ROIC.
  • The reconciliation of intrinsic value via the three discounted cash flow models.

Join Stephen Kertzman, LLB, CBV, for this advanced webinar offered to CBVs who are looking to gain further insight regarding the above-noted factors to produce more credible and defensible valuation reports.  A excel version of the model will be supplied to participants.

The information, analysis and opinions expressed in the webinars, podcasts and/or congress presentations are solely those of the presenter/author, are not reviewed by the Institute as to content or accuracy, and are not endorsed by CBV Institute or any of its Members.

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