Question for analysts at value oriented shops
How detailed do your models get? You're not focused on the minutiae like a senior, sell side equity research analyst, right?
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In the case of our fund, we are not dogmatic about certain metrics, models or multiples. We just try to come up with with a fair value of the company thinking about what the normalized business is going to be worth in 5-10 years.
Yeah, that's what I am seeing looking at old investment presentations the PM I will be working for has given.
lbo models to ascertain private market valuations; Conservative (and simple) DCF models; Comps; and Indiscriminately applying multiples.
Indiscriminately using multiples in the sense that, "TargetCo generates prodigious amounts of CF and should trade at a premium to a 15x market multiple. 15-20x is a conservative estimate." Of course, all investments have a significant margin of safety.
It's just interesting.
Yeah. When deciding on which multiples to use, you have to take everything like cash flow, risk adjusted returns, growth, business maturity, competitiveness, etc. into accounts. I guess the accuracy of the number grows with your experience.
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