DCF model

Calcualte the equity stakes applying both perpetuity and exit multiple model (use average EBITDA multiple.

Determine the discount rate using the CAPM model using assumption given in the case .

H G OUTREACH NETWORKS: FIRST VENTURE ROUND Completed Analysis for DCF Method (dollars in millions) Key Assumptions: Expected cash flows (adjusted for probability of failure) Market rate used to discount flows (CAPMI) Interim flows valued 2011 2012 137.0 Revenue EBITDA EBIT Net Income Free Cash Flow 38.8 38.2 26.7 204 2013 198.0 60.1 59.1 41.4 323 2014 260.0 76.7 75.4 52.8 40.8 2015 335.0 98.9 972 68.0 52.6 2016 425.0 125.4 123.2 86.3 2017 525.0 157.9 155.2 108.7 845 2 3 4 5 6 Escit valuation 14.0% 5+1.5*6 174.5 Discount rate (avg all comparables) NPV: Forecast period FCFs TV growing perpetuity (8 = 5%) Total NPV Expected NPV (50% Prob of success) Equity stake $985,3 TV 174,5 Forecast period FCF TV median EBITDA multiple Total NPV Expected NPV (50% Prob of success) Equity stake