Ask three advisers what a company is worth and you will get three numbers, each defended with conviction. They are not wrong; they are answering different questions. Trading multiples say what the market pays for similar companies today. Precedent transactions say what buyers have paid for control. A discounted cash flow says what the business is worth on its own plan.
The football field
The football field chart puts every method on one page as a range, not a point. Where the ranges overlap is where a defensible price sits. Two more lines turn it into a negotiating tool: the price you offer and the most you can pay, which is the standalone value plus the synergies only you can deliver.
Here, most methods place the standalone value between roughly 880 and 1,050 million. Precedent transactions reach higher because they include control premiums paid by other buyers. Adding the synergies the buyer can deliver lifts its value to between 1,050 and 1,300. An offer of 1,100 is defensible against the market and leaves room below the walk-away price of 1,180, the value of the target to this buyer.
Reading the chart like a board member
- Which ranges are wide, and why? A wide DCF range means the value depends on assumptions that diligence must test.
- How much of the offer is synergy? Every unit paid above standalone value is a gift to the seller unless the synergies arrive.
- Where is the walk-away line? It should be agreed before the auction, not discovered during it.
Bartor S.
Founder
