Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hello, I'm trying to conduct a sum-of-the-parts valuation of a company with three divisions. I have free cash flow and other relevant numbers for the

Hello, I'm trying to conduct a sum-of-the-parts valuation of a company with three divisions. I have free cash flow and other relevant numbers for the entire company, but none for the specific divisions. All I have is percentages of EBITDA by division for 2019, so for example 100% of the company has an EBITDA of 2876, and the three divisions are split by 61%,27% and 12% of the total EBITDA. I also have divisional multiples (EV/EBITDA) for comparable companies available.

I am trying to find the enterprise value of the company by finding EV of each division and then combining the values. My thinking is that using the FCF of the entire company and using the specific divisional multiples will not work, so I have to find a FCF of each division. With the limited information, all I can think of is starting with one division and multiplying the forecasted numbers with how big percentage of the total company the division is. For example in 2019 the EBITDA was 2876 total, if I was to calculate the EBITDA for the Imaging division (61% of total EBITDA), I would do 2876*0.61 =1754 and do the same with every number necessary for the final FCF of the division.

Not sure if I explained this in an understandable way, but any help is appreciated!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Financial Planning

Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk

14th edition

978-1305887725, 1305887727, 1305636619, 978-1305636613

More Books

Students also viewed these Finance questions

Question

Solve the given equations for x (0 x Answered: 1 week ago

Answered: 1 week ago