Applied Business Valuation

Evaluation Theory
There are two basic ways to evaluate the company and thus the assessment is based on the assumption of continuity or a liquidation of view. These two approaches can be used four types of assessment methods:

* Net Present Value - Valuation Methods
* Compared - Evaluation methods
* Special - Evaluation methods
* Option - valuation methods used

In the episode - a brief explanation of the methods most often used in corporate valuation.

Trading Multiples
The method of multiple trading is a comparison with the market price of comparable companies (peers) with similar characteristics (in terms of investors).

The price of debt (EV) of each peer list is at the level of peer result (EBIT, for example) in a given year (planned or completed), compared hence the "multiple" or the relationship. After the relevant provision many times, many are multiplied with the expected gains from the target arrive at relevant indication of the VE target.

Several transactions
The transaction multiples method is a comparison of prices in the acquisition of historical societies with similar characteristics (in terms of investors) paid.

The price of debt (ER) on the last reported income (eg EBIT) of these acquired companies paid so that the "multiple" or money. The methodology is based on profitability and short-term historical basis and does not take account of future changes in profitability.

Discounted Cash Flow (DCF)
DCF valuation reflects the present value of expected free cash flow stream of future business, under certain assumptions about the discount rate (WACC), the state of society in the time of terminal, etc.

Economic Value Added (EVA)
EVA is a measure of how much cost a company about the cost of capital. And he tells one how much wealth the company for the providers of capital has created. Although the methods differ from the assessment that results is identical to the DCF.

Leveraged Buyout (LBO)
LBO valuation reflects the EV, which is a financial sponsor / private equity buyer is prepared for the company under certain assumptions about the financial leverage of the initial value, holding period and IRR requirements, will be paid based

Conclusion
The assessment methods used above to give the field of assessment most likely a specific company.