Football Field Graphs
Commonly used to compare the results of the different methods of valuation
A football field graph is a table showing the valuation of a company or asset according to different methodologies. It is called a field chart since the stacked bars look like yard lines an an actual football field.
The overall outcome is using the range to help the acquirer or investor to determine if the target company or single share is overvalued or undervalued. Another goal is to sanity check various valuation methodologies against one another.
Some of the methodologies used are:
The graph will show the different mean valuations and multiples for the different methodologies and allow the person who is conducting the valuation (or most likely their MD) to decide which method to use primarily to achieve the best possible valuation. It can also be found in the summary of investment banking's pitch book or equity research report or used in fairness opinion.
How to create a Football Field Graph?
Step 1: Gather data with ranges of values: Low - Spread - High
Companies are valued using a combination of multiples and future cash flows, and each of these can be taken in a best, worst and median case. Therefore, we will have a range (spread) of values of the company.
- For example, with discounted cash flow, you would assume that the company will have a terminal growth rate of x%, x ± 1%.
- With precedent transactions and public comparables, choose relevant sales and profitability metrics.
Step 2: Create stacked bar chart: Format data series, edit horizontal axis labels, show the spread bar only, hide the rest.
Step 3: Add the implied share price, or range of implied share price.
Example of Football Field Chart
Below is a video of a simple football field chart template in Excel to get you started. Down below are more detailed instructions for a more complex graph.