Quote:
Originally Posted by wwkayaker
You may be able to give me some direction on my current learning. I have been learning about using net present value and discounted cash flow models to value stocks. I just started trying to find downloadable excel spreadsheets of these models that I can use rather than trying to build my own spreadsheet. I have found a couple of templates but I question how good they are. Is there a resource you could point me to for more info and a good spreadsheet for the tasks?
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Check out Aswath Damodran, he has several excellent, open source valuation models readily available online.
As for what the valuation would have been based on, roughly speaking Onex would likely have determined what to pay by taking a 3-5 year average of bottom line cash flow (think EBITDA), adjusted for extraordinary items (management salaries above market, for example), and then multiplied by a comparable acquisition factor in the airline industry.
So something roughly like:
Adjusted 3 Year Average EBITDA x acquisition multiple = $5Bn.
NPV models in my experience tend to be used as a justification for the purchase price, as opposed to the determination.