The Art of Firm Valuation

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By David Solomon

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The Art of Firm Valuation

  1. 1. By David SolomonWWW.SOLOMON-CAPITAL.COMDAVID@DSC.CO.ILThe Art of FirmValuationBy David Solomon
  2. 2. About David SolomonWith over 20 years of experience David Solomon, is one of Israels leading experts in thefield of Corporate Finance. David, is the Former Managing Partner of Cukierman & Co.Consulting Ltd, the founder and the CEO of B-PLAN, 4HIGHTECH [Investment Bank], andMicromedic Technologies [Listed on the Tel Aviv Stock Exchange].Mr. Solomon has worked with high profile clients in the global market such as IBM, Scitex,Bezeq, Bank Discount, Bank Hapoalim, Bank Leumi, Israel Airospace Industries [IAI],QUALCOMM, Dor Energy, RAPAK and others.Mr. Solomon lectures in Courses in academic and other institutes. David is the author ofvarious books including: "From Seed to IPO", "Business Planning in the Post Bubble Era",and "Biomedical - from Research to Market, The Business Challenge". He hassuccessfully worked with dozens of emerging companies and is accredited with over ahundred winning business plans
  3. 3. Experience at a GlanceExperience at a GlanceYOUR GATEWAY TO SUCCESSDavid Solomon Books : [Sold out]
  4. 4. Experience on a Glance….
  5. 5. The biggest reason for badvaluations is not bad model butbias……Building a better valuation modelis easy but getting the bias out ofvaluation is difficult…..A. DamodarnSome basics…RiskPotential
  6. 6. $$$$$TimeEarlyStageGrowthMaturityDeclineCompany Life Cycle
  7. 7. Company Life Cycle - & Firm ValuationForecasting Period Post Forecasting PeriodHistoryGround zero
  8. 8. TheCompany ForecastingTheMarketTheEnvironment-TheValuationModel-TheValuationThe Valuation ProcessEvaluation ValuationForecasting
  9. 9. The Valuation Main Approach• The Book Value Approach• The Market Value Approach• The Income Approach
  10. 10. justThe Book Value ApproachBookAssetsValueAdjustmentFactorLiquidityFactorLiabilityAssets Market Value
  11. 11. PENetProfitFirmValueThe Market Value Approach
  12. 12. CurrentNetcashDiscountedCashflowNetSurplusassetsFirmValueThe DCF ApproachFCF TVDCF = -------_+ ---------- +Net Surplus(1+r)t (1+r)n
  13. 13. Cost of Capital -WACCWACC = Cd(1-T)(D/A) + Ce(E/A)Where;Cd - cost of DebtCe - cost of EquityT- Tax rateD - DebtE - EquityA- AssetsCost ofDebtCost ofEquityCostOfCapital
  14. 14. RiskfreerateRiskFactorCAPMCost of Equity= Rf +Beta(Rm-Rf))Where;Rf - Risk free RateBeta - Risk factor [Market, Country, Special)Rm - Market Premium rateCost of EquityCapital Asset Price Model - CAPM
  15. 15. FACT!:Main Causes for Unsuccessful Fundraising are:Lack of clear STRATEGYPoor PREPARATION -Broken COMMUNICATIONBAD LUCK…Contact me today for :BUSINESS PLAN - FIRM VALUATION - FUNDRAISING - M&Adavid@dsc.co.il

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