7 Your firm is considering the purchase of 60% of a public firm, WinterCo, that has EBITDA of $1,000,000. Your small position in an identical private firm has a value of 5X EBITDA. What is the most you can pay for WinterCo? Market Transaction Multiple 6X Liquidity Discount 25% Industry Multiple 5.5X Control Premium 40% + 8 What is value of one share for Cowbell ? Today Year 1 Total Dividends 4000 Year 2 4000 Year 3 4000 Shares = 1000 Dividends will grow 5% annually after Year 3 Ke = 9% 7 Your firm is considering the purchase of 60% of a public firm, WinterCo, that has EBITDA of $1,000,000. Your small position in an identical private firm has a value of 5X EBITDA. What is the most you can pay for WinterCo? Market Transaction Multiple 6X Liquidity Discount 25% Industry Multiple 5.5X Control Premium 40% + 8 What is value of one share for Cowbell ? Today Year 1 Total Dividends 4000 Year 2 4000 Year 3 4000 Shares = 1000 Dividends will grow 5% annually after Year 3 Ke = 9%