Question
Zeta Group Holdings (Zeta) has three divisions. You have been asked to use valuation multiples of comparable companies to value Zeta. You have collected the
Zeta Group Holdings (Zeta) has three divisions. You have been asked to use valuation multiples of comparable companies to value Zeta. You have collected the following information on Zetas performance in each division for the most recent year.
Division | Sales | EBITDA |
Pharmaceuticals | $ 1 billion | $ 300 million |
Cosmetics | $ 400 million | $ 100 million |
Medical Devices | $ 2 billion | $ 400 million |
Zeta currently has $2 billion in debt outstanding and a cash balance of $300 million. There are 1,000 million shares outstanding.
You find comparable firms for each division and estimate the median values for different multiples for each division:
Division | Multiple | Median value |
Pharmaceuticals | Enterprise Value/Sales | 3 x |
Cosmetics | Enterprise Value /EBITDA | 1.5 x |
Medical Devices | Enterprise Value /EBITDA | 5 x |
Please use the information collected to complete the valuation for each share in Zeta.
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