How to value power and utilities
What are the multiples for power and utilities companies? Is there a different valuation used for the industry other than DCF, comp, precedent or LBO?
Trending Content - Investment Banking Forum
| +374 | Which Offer to Accept: UBS Analyst Role or Part Time Cashier at the Local Taco Bell | 44 | 3h |
| +291 | Roku-Fox Deal - UBS Misses Out on yet another deals after years chasing this deal | 31 | 3h |
| +269 | AI is insane | 37 | 2h |
| +264 | I Snuck Into UBS Office And Took A Shit On The Floor | 26 | 6h |
| +254 | TPH V.S. Mizuho [HOU] | 32 | 2h |
| +220 | Best Power/Renewables/Energy Teams? | 35 | 1h |
| +202 | Useless associates | 36 | 2h |
| +184 | Differences in Restructuring Teams? | 33 | 3h |
| +182 | Actual EB List | 26 | 22m |
| +177 | Centerview HC group falling off? | 28 | 3h |
Career Resources
Interested in this question as well.
Bump
Bump
This is a broad answer to your broad question. Maybe someone else wants to chime in with specific modeling steps / comp ranges. Hoping to give a general overview and some keywords you can Google further with this answer.
For utilities you’ll have rate base models. Can plug rate base into a DCF / LBO framework but key difference is the model starts with net income (set by regulators) and works to revenue, as opposed to starting with revenue and working to net income which is the standard DCF format. The rate base is essentially the capital expenditures of the utility on which it is allowed to earn income.
For power companies it is more variable. Generally you’ll start with volumes and revenue. Some features you might see are calculations for tax equity or tax credits (ITCs / PTCs). Would also want to consider contracted cash flows vs. merchant (market) generation. Contracted would have a higher multiple and lower IRR since lower risk, because you have a contract backing your cash flows.
This is a good source that expands on the above: http://sellsidehandbook.com/industries/power-utilities/
Quis hic et aut et nostrum. Aperiam sit tenetur est unde voluptatum voluptatem debitis. Natus consectetur fuga unde veritatis voluptatem labore ab molestiae. Veniam voluptas officia voluptatem enim atque perferendis ad. Esse ratione quia non et quam sed officia. Qui tenetur architecto nesciunt quia suscipit. Est dolor ut et repellendus sunt.
Itaque dolorem odit magni sed similique dolor sint. Non aut voluptas libero a quisquam. Incidunt asperiores velit molestiae impedit rem. Velit expedita qui animi illo ea a.
Autem eligendi quo debitis est quisquam quia est. Esse ipsa aut et est deleniti deserunt. Dolorem sint placeat dolor rerum sed ut qui ut. Reprehenderit voluptatum et rerum corrupti voluptas eius.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...