What are the "best" valuation methodologies in your opinion and why?
Which methodologies fit which situations?
Which methodologies typically have a higher valuation, which ones typically give a lower valuation?
Edit: Admittedly, this was a poorly and vaguely asked question, but certain industries have certain valuation metrics that are different. For example pre-revenue growth tech companies can't be valued in the same way as cash-flow stable copper mines can.
My questions is really asking, which valuation methodologies are best for which situations? Where do you think certain methodologies are more accurate than others?
For example: @Big Banker Brand says "Transaction comps, no one cares about anything else in the m&a space"
While says @ValuePro states "If you are looking at finite lived assets or highly contracted assets like in infra, then DCF. Multiples make no sense to use"
Both helpful anecdotes.
Transaction comps, no one cares about anything else in the m&a space
This is really what I was asking, why don't people go by DCF ever?
Heap of shit going in and a heap of shit coming out. It’s pure conjecture and always overly optimistic coming from the sellside. Buy side only cares about LBOs
Why do I have the feeling that OP wants us to do his fucking homework
Lmao not in school but that would be hilarious. This question was prompted by something I saw on twitter
LBOs are so cute I love them
Show me them stable cash flows girl
If you are looking at finite lived assets or highly contracted assets like in infra, then DCF. Multiples make no sense to use
So basically DCF for capital asset heavy businesses is a good rule of thumb?
Go read the guides, buddy
Guess I should've done more than skim
Bro no way you are a second year analyst and don’t know which valuation method usually gives the highest valuation number and which one gives the lowest…
I'm not exactly a top tier shop that burns through a variety of methods on an hourly basis, we have a niche sector and most deals look almost exactly the same. Pay is good but as far as experience and learning things like this goes I'm aware there are areas in which I am behind.
Long story short I interned at a niche shop in college, knew I only had to know a narrow scope of things to get the job, one thing turned into another and I stayed on year round while I was a student. Took a position after graduating bc a) they treat me very well b) pay is decent c) I spent so much time working that I barely had time to recruit the regular way despite coming from a target. I'd love to learn more and then lateral, which is what I'm in the process of doing rn. Turns out time goes by faster than you think it does
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