Quote:
Originally Posted by IliketoPuck
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.
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Ha, I went to one of his courses at NYU. Very smart man and an excellent professor.