IPO Valuation (Comparable Analysis)

lol

Hey Noonies,

For Comparable Analysis, I would include all of the following: Market Cap, Enterprise Value, P/E ratio, EV/Revenue, EV/EBIT, EV/EBITDA. Also include a table which shows the Mean, High, and Low figures for each calculation.

For the stock prices of the IPO's you could use either approach you listed above, but another you might consider is using the high and low closing prices in each year or month.

Noonies:

1) Period end prices should be fine - since you're looking at 20 quarters you should see the same basic trend. One additional data point that may be worth having is the price change in the company's first day of trading - this can show how much the stocks were underpriced at their IPO.

2) Schrute has good advice for you above. I'm not sure that sales multiples are that relevant nowadays but it can't hurt to have them.

Do you know if your boss is looking for the multiples back at IPO for these companies, or does he want their current trading multiples? Finding multiples at IPO can be pretty tough.

3) yes- getting current multiples is what spreading comps is

Schrute and Downtown, thanks for your answers!

I actually kind of forgot about this thread because I was assigned other, more urgent tasks. However, now that those projects are over I'm back working on those IPOs haha. I was able to receive some clarification on what I have to do:

The goal is to find some IPO "success stories" in the cleantech sector (on which my VC focuses) and make a a few case studies of those stories. Since VCs are usually locked in for up to 12 months a success story will most likely be a stock with a positive 1 yr return.

For my case studies, I will probably only pick the "successful" IPOs that happened after the crisis (which are very very few lol). Now, my question is, what kind of info should I put into this case study? Obv a description of the company's business model etc. but can you guys think of something in particular that could be of interest to the VC?

In addition to the case studies, I was asked to compare EBITDA multiples of comparable companies at time of their IPOs. (To get an idea of how our portfolio companies should be valued when they let their shares float).

If I understand correctly, I'm supposed to plot EV/EBITDA against EBITDA margins at time of IPO, identify the outliers and come up with a hypothesis as to why they stand out. Fun fact, there is barely any correlation between EBITDA multiples and margins and the scatterplot looks as random as it gets, even after I split the companies up into differenet sectors (solar, water etc).

I'm a huge newbie when it comes to those kind of things (rising junior, first internship, never took a relevant class besides Accounting 101 and Corp Fnce 101...)..therefore I was wondering, how should EBITDA margins affect EV/EBITDA...moreover, I realized that EBITDA multiples at the time of IPO seem very strange, to say the least...when I used the first pricing date I could get something like 20, when I used the day after the first pricing date it would suddenly jump to 80 etc. You could really help me out if you could kind of give me the intuition what exactly EV/EBITDA means for a freshly listed company (shouldn't EV equal market cap at this point?!)

Downtown, I already included first day pricings. Crazy what kind of first day returns some companies had (both negative and positive..)

Thanks for all your input!