Valuation Concepts!

Folks,

I wanted to start by saying you are doing a
> wonderful job.  I have some questions below and would really
> appreciate your response:
>
> 1) Private Company Valuation:  In order to calculate for a private company, the Cost of Debt
> and Cost of Equity for WACC has to be calculated. I know you can use
> comparable companies to do but what is the exact way? if I have all
> the information for the private company (such as financials and annual
> reports and forecasts).  How do we calculate it from the sources i
> have provided you?
>
> 2) In a IPO scenario,  if a company is trying raise $600 million and
> the EV value of the company is $ 2B.
>           a) How many shares would a company have to issue for the
> $600m ? What is formula or the approach to figure out the number of
> shares issued?
>            b) where  will these 600m will be show in the financial
> model in the foretasted?
>            c) Should the expenses of issuing equity should be added
> in the WACC i.e. cost of equity expenses
>
> 3) Working Capital:
>
>     When Projecting working capital: Should all the items which are
> in short term financing should be projected?
>       If the WC is increased, add and vice versa?
>       Is there a problem if the change in WC is always negative?
>
>
> 4) CAPEX:
>
> As the Capex is projected for future.  The increase or decreased in
> CAPEX should be deducted for FCFF purposes. What happens if the change
> is Capex is negative, Shall we deduct that still? Because if you
> deduct that it turn in to positive in the FCFF calculation.  For
> Example. Change in Capex is -350 for 2010Y. and if i deduct the value
> turns  positive it would have a different number?  What should we do
> for this?
>
> 5) EV
>
> Enterprise value =
> common equity at market value
> + debt at market value
> + minority interest at market value, if any
> – associate company at market value, if any
> + preferred equity at market value
> – cash and cash-equivalents.
>
> Regarding EV, if I am calculating for a firm as per 2011 value.
>  Assuming all the Debt are loans. Should I take the number of 2011
> Debt( Long term and short)? i.e. All the liabilities?
>
> 5) Terminal Value:
> I have noticed Terminal value is always bigger than the PV of FCF? is
> that normal? If PV of FCF is bigger what does that mean?
>
> 6) PE transactions:
>
> When PE companies pay 30% for private company with control premium.
>
> For Example
>
> PE Co buys 30% of Company Xyz $300million
>
> with the control premium means? that the value was originally
> $280million and had to pay $20million extra to get the controlling
> effect?
> How do the Bankers come up with the premium number?
>
> Thank You,

P.S. Apologies for any grammatical mistakes..