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The value of all remaining cash flows after the finite forecast period is captured in the terminalvalue, which is, effectively, a capitalization of earnings or cash flows at the end of the forecast period. These cash flows are discounted to the present at an appropriate discount rate and equity value is determined.
The EBITDA multiples in 2021 not only reached, but much exceeded pre-pandemic levels. You can refer to the table below to see how the EBITDA multiples for the industries available on the Equidam platform will change on November 29th, 2021. The data is based on the 2021 estimate, published annually by Prof. 34%*), footwear (?
Ultimately, these margins that have already occurred are an outcome of the real world economic conditions that the business operates within, as well as the company’s internal operations, and so having these values reasonably consistent with your future projections is usually a safer bet than allowing them to vary by a huge amount.
A few of you did take issue with the fact that the growth rate that I used for the first five years dropped from 35%, in my November 2021 valuation , to 24%, in my most recent one. It was the reason that I argued at a $1.2
The value of an interest in a business is a function of the expected cash flows to the interest (which are derivative of the expected cash flows of the business itself, the growth of those cash flows, including a terminalvalue at the end of an expected holding period, and the risks associated with achieving those cash flows.
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