Question
The financial information for Newco is the VC's expectation at the time of exit. Company 1 Company 2 Company 3 New Company EV 200 320
The financial information for Newco is the VC's expectation at the time of exit.
Company 1 | Company 2 | Company 3 | New Company | |
EV | 200 | 320 | 110 |
|
Revenue | 64 | 70 | 50 | 50 |
EBITDA | 50 | -10 | 45 | 10 |
EBIT | 10 | 40 | 22 | 4 |
Net income | 18 | -34 | 8 | 5 |
Number of employees | 110 | 350 | 100 | 220 |
Book value of equity | 110 | 40 | 50 | 55 |
Market value of equity | 200 | 50 | 400 |
a. What is the new company's valuation based on average comparable EV/Revenue, EV/EBITDA, EV/EBIT, EV/Employees, P/E, and P/BV, respectively? Ignore negative ratios. (Do not round your intermediate calculations. Enter your final answer rounded, if necessary, to 2 decimal places without the $ symbol).
b. Which ratio-based valuation gives the highest valuation?
c. Which ratio-based valuation gives the lowest valuation?
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Income Tax Fundamentals 2013
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