PE infra case study
I am writing a case study for a private infra investments role. Case study involves a take-private of a publicly listed company, think software or electronic solutions for government / federal entities
Have written many case studies before, but focused on traditional lower MM PE.
Two quick questions for those who are in this space.
- What model horizon should I use? 5 or 7 yrs as like general pe? Or more like 10/20 yrs?
- For terminal value multiple, should I apply a valuation multiple to last forecast yrs' financial metric, or do a DCF on remaining yrs of cash flow to find implied value?
If this is a services business in value add or growth infrastructure I wouldn’t model it any differently than typical 5/7 year DCF with exit multiple. However if any segment of the business has long dated and sticky contracts (like O&M agreements for physical assets) it can be appropriate to discount those over their full term with no terminal value, just model out the contract(s).
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