eddiebelaval/squire/valuation-analyst

Valuation Analyst

Expert valuation agent that determines fair value of companies and assets using multiple methodologies. Specializes in DCF analysis, comparable company analysis, precedent transactions, and asset-based valuation. Provides comprehensive valuation for investment decisions, M&A, and strategic planning.

This skill applies rigorous valuation frameworks used by investment banks, private equity firms, and corporate finance professionals. Perfect for startup valuations, M&A analysis, investment decisions, and fairness opinions.

Core Workflows

Workflow 1: Discounted Cash Flow (DCF) Valuation

Objective: Value company based on projected future cash flows

Steps:

1. Financial Projections (5-10 years)

• Revenue Projections:
• Historical growth analysis
• Market size and share
• Segment-level forecasts
• Growth rate deceleration

• Profitability Projections:
• Gross margin trends
• Operating margin expansion
• SG&A leverage
• Target margins at maturity

• Capital Requirements:
• CapEx as % of revenue
• Working capital changes
• D&A schedule

1. Free Cash Flow Calculation

``` EBIT (Earnings Before Interest & Taxes)

• Taxes (EBIT × Tax Rate)

= NOPAT (Net Operating Profit After Tax)

• Depreciation & Amortization
• Capital Expenditures
• Change in Working Capital

= Unlevered Free Cash Flow (UFCF) ```

1. Discount Rate (WACC)

• Cost of Equity (CAPM):

``` Ke = Rf + β × (Rm - Rf)

Where: Rf = Risk-free rate (10-year Treasury) β = Levered beta Rm - Rf = Equity risk premium (5-7%)

For private companies, add size premium (2-6%) ```

• Cost of Debt:

`` Kd = Interest Rate × (1 - Tax Rate) ``

• WACC Calculation:

``` WACC = (E/V × Ke) + (D/V × Kd)

E = Market value of equity D = Market value of debt V = E + D ```

1. Terminal Value

• Perpetuity Growth Method:

``` TV = FCF(final year) × (1 + g) / (WACC - g)

g = Terminal growth rate (typically 2-3%) ```

• Exit Multiple Method:

``` TV = EBITDA(final year) × Exit Multiple

Exit multiple based on comparables ```

1. Enterprise Value Calculation

``` Enterprise Value = Σ(FCF / (1 + WACC)^t) + TV / (1 + WACC)^n

t = year number n = final projection year ```

1. Equity Value Bridge

``` Enterprise Value

• Total Debt
• Preferred Stock
• Minority Interest
• Cash & Equivalents
• Non-operating Assets

= Equity Value

Per Share Value = Equity Value / Diluted Shares ```

1. Sensitivity Analysis

• WACC vs Terminal Growth matrix
• Revenue growth sensitivity
• Margin sensitivity
• Multiple sensitivity

Deliverable: DCF valuation with sensitivity tables

Workflow 2: Comparable Company Analysis

Objective: Value company using trading multiples of similar public companies

Steps:

1. Select Comparable Companies

• Same industry/sector
• Similar business model
• Comparable size (revenue, market cap)
• Similar growth profile
• Geographic relevance
• Minimum 5-7 comps preferred

1. Gather Market Data

• Stock price (current)
• Shares outstanding (diluted)
• Market capitalization
• Total debt
• Cash and equivalents
• Minority interest

1. Calculate Enterprise Value

``` Market Cap = Share Price × Diluted Shares

Enterprise Value = Market Cap + Debt - Cash + Minority Interest ```

1. Gather Financial Metrics

• LTM (Last Twelve Months):
• Revenue
• EBITDA
• EBIT
• Net Income
• EPS

• NTM (Next Twelve Months) estimates:
• Revenue
• EBITDA
• EPS

1. Calculate Trading Multiples

1. Analyze and Select Multiples

• Calculate mean, median, range
• Identify outliers
• Consider premium/discount factors
• Select appropriate multiple range

1. Apply to Target Company

``` Enterprise Value = Target Metric × Selected Multiple

Example: Target EBITDA = $50M Median EV/EBITDA = 12.0x Implied EV = $600M ```

1. Valuation Range

• Low (25th percentile multiple)
• Mid (median multiple)
• High (75th percentile multiple)

Deliverable: Comparable company analysis with valuation range

Workflow 3: Precedent Transaction Analysis

Objective: Value company using M&A transaction multiples

Steps:

1. Identify Relevant Transactions

• Same industry
• Similar deal size
• Recent (last 3-5 years)
• Similar deal structure
• Minimum 5-7 transactions

1. Gather Transaction Details

• Announcement date
• Acquirer and target
• Deal value
• Deal structure (stock/cash)
• Strategic vs financial buyer
• Control premium paid

1. Calculate Transaction Multiples

• EV/Revenue at time of deal
• EV/EBITDA at time of deal
• EV/EBIT at time of deal
• Premium to trading price

1. Adjust for Context

• Market conditions at time of deal
• Synergy expectations
• Competitive bidding situation
• Distressed vs strategic deals

1. Apply to Target

`` Transaction EV = Target Metric × Transaction Multiple ``

1. Consider Control Premium

• Typical premium: 20-40% over trading
• Adjust for minority vs control stakes
• Strategic vs financial buyers

Deliverable: Precedent transaction analysis with implied value range

Workflow 4: Startup/Private Company Valuation

Objective: Value early-stage or private company

Steps:

1. Valuation Method Selection

1. Revenue Multiple Approach

• Select Comparable Multiples:
• Public SaaS: 5-15x revenue
• Marketplace: 1-5x GMV, 5-15x revenue
• E-commerce: 0.5-2x revenue

• Apply Discount:
• Illiquidity discount: 20-35%
• Size discount: 10-30%
• Stage discount: varies

• Calculation:

`` Value = Revenue × Multiple × (1 - Discounts) ``

1. Venture Capital Method

``` Exit Value = Projected Revenue × Exit Multiple Pre-money Value = Exit Value / Target Return

Example: Year 5 Revenue = $100M Exit Multiple = 6x Exit Value = $600M Target Return = 10x Current Value = $60M ```

1. Scorecard Method (Pre-revenue)

• Average pre-money for stage/region
• Score on factors (±50%):
• Team strength
• Market opportunity
• Product/technology
• Competitive environment
• Partnerships
• Need for financing
• Multiply base by weighted factors

1. Cap Table Implications

• Pre-money vs post-money
• Dilution calculation
• Option pool sizing
• Liquidation preferences

Deliverable: Private company valuation with methodology explanation

Workflow 5: Sum-of-the-Parts (SOTP) Valuation

Objective: Value multi-segment company by valuing each segment separately

Steps:

1. Segment Identification

• Business segments from filings
• Geographic segments
• Product line segments
• Operational vs non-operating assets

1. Segment Financial Separation

• Segment revenue
• Segment EBITDA
• Segment assets
• Corporate overhead allocation

1. Segment Valuation

• Value each segment using appropriate method:
• Growth segment: Revenue multiple or DCF
• Mature segment: EBITDA multiple
• Asset-heavy: Asset-based
• Use segment-specific comparables

1. Corporate Adjustments

• Corporate overhead (capitalize as liability)
• Shared services
• Intercompany eliminations
• Net debt allocation

1. Sum of Parts

``` Segment A Value: $X

• Segment B Value: $Y
• Segment C Value: $Z
• Corporate Overhead Value: ($W)
• Net Debt: ($D)

= Total Equity Value ```

1. Conglomerate Discount

• Typical discount: 10-25%
• Reasons: complexity, capital allocation
• Consider break-up value

Deliverable: SOTP valuation with segment breakdown

Quick Reference

Valuation Multiples Reference

By Industry (EV/EBITDA Ranges)

SaaS Revenue Multiples

Common Adjustments

DCF Template

# DCF Valuation: [Company Name]
 
## Assumptions
| Input | Value | Source |
|-------|-------|--------|
| Risk-free Rate | % | 10-yr Treasury |
| Equity Risk Premium | % | Market |
| Beta (Levered) | | Comparable |
| Cost of Debt | % | Current rate |
| Tax Rate | % | Statutory |
| D/E Ratio | % | Target |
| Terminal Growth | % | GDP proxy |
 
## WACC Calculation
Cost of Equity: %
Cost of Debt (after-tax): %
WACC: %
 
## Projections ($M)
| | Y1 | Y2 | Y3 | Y4 | Y5 | Terminal |
|-|----|----|----|----|----| ---------|
| Revenue | | | | | | |
| EBITDA | | | | | | |
| EBIT | | | | | | |
| Taxes | | | | | | |
| NOPAT | | | | | | |
| + D&A | | | | | | |
| - CapEx | | | | | | |
| - Δ WC | | | | | | |
| FCF | | | | | | |
| Discount Factor | | | | | | |
| PV of FCF | | | | | | |
 
## Valuation Summary
Sum of PV of FCF: $
Terminal Value: $
PV of Terminal Value: $
Enterprise Value: $
-Net Debt: $
Equity Value: $
Shares Outstanding:
Value per Share: $
 
## Sensitivity Analysis
[WACC vs Terminal Growth matrix]

Best Practices

Methodology Selection

• Use multiple methods for triangulation
• Weight methods by applicability
• Consider data availability
• Match to purpose (minority, control, etc.)

Assumption Setting

• Ground assumptions in data
• Be explicit about sources
• Test sensitivity
• Document reasoning

Presentation

• Show range, not point estimate
• Include key assumptions
• Provide sensitivity analysis
• Compare methods

Integration with Other Skills

• Use with `financial-analyst`: Financial statement analysis
• Use with `investment-analyzer`: Investment decision support
• Use with `revenue-modeler`: Revenue projection inputs
• Use with `contract-analyzer`: Deal term analysis
• Use with `compliance-checker`: Regulatory considerations

Common Pitfalls to Avoid