I am building a lbo model to buy a public company and had 2 questions. One, how will I determine the purchase price? I don't have any assumptions given to me. I understand some recommend using DCF but is using an implied price from PE & EPS comps sufficient? Two, buying a public company might need a premium..how do I determine that?

Start by using current share price, VWAP 1 months, 3 months and 6 months - add all on the FF Look how much premium ppl paid for similar companies in the past - add on the FF Add implied price from trading and precedent comps Add DCF and LBO based on brokers Last either add mngt case and your funds case or add downside and upside cases To receive a couple of banana points from your seniors, you can add price as implied by the future share price analysis and price as implied by the 2nd bidder Target IRR Look at the result and determine the price range range Create AVP slide based on that

Determining purchase price

Analyst 1 in PE - Other

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Authored by: Certified Investment Banking Professional - 1st Year AssociateCertified Investment Banking Pro

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Determining purchase price

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