LBO - Quick & Dirty - for a early stage investment
I was hoping to clarify the use of the LBO model for a project. My inputs into the model would be as followed: 1. Transaction Enterprise value would be the the Max Debt (Ending Balance under the debt sweep) of the project, which in our case occurs in year 2 2. New Equity is a plug, and up to us to ... I was hoping to clarify the use of the LBO model for a project. My inputs into the model would be as followed:

1. Transaction Enterprise value would be the the Max Debt (Ending Balance under the debt sweep) of the project, which in our case occurs in year 2
2. New Equity is a plug, and up to us to chose the debt/equity level
3. Acquistion Equity = Transaction Enterprise Value - Total Transaction Costs = Total Uses
4. IRR analysis is simply using a 1x multiple, since it is project based and has a finite life.

Is this correct?

After speaking with Hamilton, who sugested statring with cash flow and working backwards, I got to the max amount of debt needed based on p/l, which I would conclude shoulde be the "Transaction Enterprise Value" of the deal?

Thanks Read More

Re: Negative Goodwill
We apologize for the delay in response. It seems as if your post didn't come through to our control panel until now. We are looking into this to see if this is a technical issue on our end.

To respond to your question, what is the book value of the company?

Re: Sum + If Array
From our Advanced Excel for Data Analysis class, recall that the "third" approach was using IF statements. Since we can easily demonstrate that everything is a mathematical calculation using multiplication and =, then in reality, for the multiple conditions, you don't need the IF statement... From our Advanced Excel for Data Analysis class, recall that the "third" approach was using IF statements.
Since we can easily demonstrate that everything is a mathematical calculation using multiplication and =, then in reality, for the multiple conditions, you don't need the IF statements.

So the * between the two conditions (Dept and Account code) is acting like an IF. If the condition is true (= Dept 101) then a TRUE or a 1 is returned. If false, then a FALSE or a 0 is returned. Then the same is repeated for (=Account Number). If BOTH are TRUE, both return 1. 1*1=1. BUT if ANY (or both) of the two are false, then a 0 is returned as such: 0*0 or 1*0 or 0*1 is 0.

Then that 1 or 0 that is returned is multiplied by the actual Entry amount and VIOLA! Read More

Re: Discounted EVA approach
Actually, we don't really like EVA much - it originally took on importance as a mgmt compensation metric as opposed to a valuation approach. By definition, it will yield a lower valuation since you are subtracting out the cost of capital, so you can think of it almost as an attempt to measure "... Actually, we don't really like EVA much - it originally took on importance as a mgmt compensation metric as opposed to a valuation approach. By definition, it will yield a lower valuation since you are subtracting out the cost of capital, so you can think of it almost as an attempt to measure "excess return". Contrasted with the traditional DCF approach that simply attempts to measure the current valuation (with a ton of difficult to measure assumptions no less, but fine). The acronym EVA says it all - what's the "value-add" on top of invested capital.

As such, your question of one-time vs perpetuity is almost irrelevant. Why? As stated above, EVA was an attempt to measure the amount of ADDITIONAL value created by the mgmt team to which their compensation will be based on. If they returned more than the cost of capital, they did their job. If they returned the same, they "met expectations"; if they returned less, they should be fired.

BTW, this is not to be confused with "Economic analysis", which makes certain adjustments to the financial statements based on footnotes to arrive at a "better" earnings figure instead of GAAP profitability. Read More

Re: Urgent: Automating Scorecard Metrics grading
This should be pretty straightforward - use a vlookup or match combined with offset. say your market growth is in cell A1 in A2:A4, put down -100% 10% 20% in B2:B4, put down 4 8 12 in cell say B1, where you want the point equivalent of whatever is in cell A1: =vlookup(A1,A2:B4,2,1) you have to ... This should be pretty straightforward - use a vlookup or match combined with offset.
say your market growth is in cell A1

in A2:A4, put down
-100%
10%
20%

in B2:B4, put down
4
8
12

in cell say B1, where you want the point equivalent of whatever is in cell A1:
=vlookup(A1,A2:B4,2,1)

you have to put -100% on top since vlookup's approximate match (the last 1 or TRUE), acn only look up in descending order.

For more on advanced vlookup methods, go to our Advanced Excel for Data Analysis class at http://www.wstselfstudy.com/programs.html Read More