DCF with subsidiaries overseas
Guys I really need your help. I'm new at this firm and I don't get much help, I most things by Googling or asking people I know. However, I took the biggest fucking project at the firm and now I need to do a DCF with multiple subsidiaries that I can't get data for, but that isn't the problem since I have some sort of consolidated annual report.
How do I do a DCF when there is multiple subsidiaries that probably has different taxes from the country where the parental company is located? How do I approximate the tax? What adjustments do I need to do?
The company that is being valuated is a car-company that builds and sells them. What should I look for? What do Ineed to adjust for most likely?
So none of you know how to do this?
What you can do is:
1- Do a model (DCF with its own WACC) for each subsidiary and then just a sum of parts.
2- The easy way is just adjusting the WACC (risk free rate, cost of debt etc for the consolidated model).
But what if I can't get a hold of the annual report for each subsidiary then?
Just add a country risk premium to cost of equity. E.g., if the company is half Nigeria, half US, and half of the Nigeria country risk premium.
Use blended tax rate for company.
you’re definitely overthinking this. Most meaningful size companies have international subs
But what if I can't get a hold of the annual report for each subsidiary then?
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