DCF, Transaction Comparables and Trading Comparables: which one is highest and lowest?
All else equal, what is the order of the magnitudes of these valuations from lowest to highest? I screwed up this question at my last interview.
All else equal, what is the order of the magnitudes of these valuations from lowest to highest? I screwed up this question at my last interview.
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public comps, DCF, precedent transactions public comps because its just based on how other companies current performances so its lower than the rest DCF afterwards as DCF's tend to be more optimistic with projections precedent transactions as there is usually a premium paid for other companies (i.e. 20% on top of current market cap)
Transaction, dcf, then trading multiples. But obviously, the dcf could produce a higher valuation, but generally, I believe this list is the generally accepted answer.
highest to lowest
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