WST: 4.6 Investment Banking Training - Valuation Football Field

Wall St. Training Self-Study Instructor, Hamilton Lin, CFA illustrates the football field exhibit that summarizes the valuation methodologies and associated reference ranges.

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Closed Caption:

welcome back to wall street rains case
study
second part a bar corporate valuation
and corporate finance module
in the first half
every member you learn the basics of
call but I wish methodologies trading
com steel comp premiums pay
discounted cash flow analysis break but
now sis will not take each one of those
components
in coping without discussion a capital
structure enterprise by as well as
leverage
and the basis of corporate finance and
didn't ophthalmic between equity
do not take all those ideas and
crystallize it into
this case study here in which to analyze
the acquisition
I'll you yes orch more than the Shamrock
a independent refiner in US
being acquired by Valero Energy back in
2000 01
for that lets first part of our slide
our football field
this football fields a good cleaning
because out the oven
spread all these numbers it looks just
like a football field
this football field on the left can
access has the valuation methodologies
that will utilize
we look at the 52-week trading range
that is what the public market to buy
this farm this stock act
we also get premiums paid previous the
paid
excess of the car stock price for
previously done acquisitions
we look at multiples analysis based on
precedent combo transaction preamps
this is our traditional keel cops the
multiples
and also announces a sec to publish a
company's
that will be our trading cops not know
that we
did have to set the trading card numbers
from management estimates measure
projections as well as Wall Street
analyst estimates
the recent years at the mansion
projections were slightly more
optimistic that
washing estimates and therefore you can
also see we had a significantly
different
range we also get the discounted cash
flow analysis
break up now says ultimately our
ultimate reference ratio before the
company is worth between
this and that about the 52-week trading
range
trade and were between as low as $20
toss the forty-five dollars the car
stock price as at the time that this
analysis was done and presented to the
Board of Directors
May 2nd 2001 was forty one dollars and
twenty four sets
the offer Dallas he eventually accept it
was at that time
fifty four dollars and fifteen cents a
pretty nice premium
base on the acquisition that were done
in the previous sector
previously done in this sector as well
as all deals our stock should be worth
be
anywhere between fifty 45 at fifty-five
dollars
same thing for the deal cost base their
multiples our training Khan said we
might be what imaging 45 and 65 dollars
baser Anish analyst estimates which are
lowered we would have been
anywhere between forty and fifty dollars
this kinda cash in house is up 55 to 70
break a browser 247 258 and ultimately
we said that we believe the fair price
abyss
stock into deal acquisition mocha be and
will work between 45 and 60 dollars
now folks my job to you is to prove to
you every single one and use them as the
high and the low and ranges
for that was parked right next light and
for discussion about trading cops