Question
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!
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