How would you value a company?

There are three main ways to value a company: comparable companies, precedent transactions and a DCF. With comparable companies, I look at how similar public companies trade. I'd pick peers in the same industry with similar size and growth, calculate multiples like EV to EBITDA and P/E, and apply the median to my company's numbers. Precedent transactions work the same way, but with prices paid in past acquisitions of similar companies. Those multiples usually come out higher because buyers pay a control premium. A DCF values the company on the present value of its future cash flows. I'd project unlevered free cash flow, discount it at WACC, and add a terminal value. I wouldn't rely on one method. I'd lay the ranges side by side, which is the football field chart, and see where they overlap.

There are three main ways to value a company: comparable companies, precedent transactions and a DCF. The first two are relative valuation, based on what the market pays for similar businesses, and the DCF is intrinsic, based on the company's own cash flows. With comparable companies, I look at how similar public companies trade. I'd pick peers in the same industry with similar size and growth, calculate multiples like EV to EBITDA and P/E, and apply the median to my company's numbers. Precedent transactions work the same way, but with prices paid in past acquisitions of similar companies. Those multiples usually come out higher because buyers pay a control premium. A DCF values the company on the present value of its future cash flows. I'd project unlevered free cash flow, discount it at WACC, and add a terminal value. It's the most sensitive to assumptions, so I'd show it as a range. If a financial sponsor could be a buyer, I'd add an LBO analysis, which shows what a private equity firm could pay and still hit its target return. That often sets a floor. I wouldn't rely on one method. I'd lay the ranges side by side, which is the football field chart, and see where they overlap. If they disagree a lot, I'd ask why, for example whether the peers really are comparable or whether my growth assumptions are too generous. Which method I'd weight most depends on the company. For a stable, mature business I'd trust the DCF more, and for one with volatile cash flows I'd lean on the market multiples.