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Troubled ESOPs Barry Goodman CFA , ASA, CPA/ABV, CBA, CFP Advanced Valuation Analytics, Ltd.

Troubled ESOPs Barry Goodman CFA , ASA, CPA/ABV, CBA, CFP Advanced Valuation Analytics, Ltd. Balance Sheet. Income Statement. Net Sales and EBIDTA. Valuation Numbers: This Year vs. Last Year. Capitalization Of Cash Flow Method. Estimate the capitalization rate.

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Troubled ESOPs Barry Goodman CFA , ASA, CPA/ABV, CBA, CFP Advanced Valuation Analytics, Ltd.

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  1. Troubled ESOPs Barry Goodman CFA, ASA, CPA/ABV, CBA, CFP Advanced Valuation Analytics, Ltd.

  2. Balance Sheet

  3. Income Statement

  4. Net Sales and EBIDTA

  5. Valuation Numbers: This Year vs. Last Year

  6. Capitalization Of Cash Flow Method • Estimate the capitalization rate. • Estimate the cash flow capacity. • Divide the cash flow capacity by the capitalization rate.

  7. Capitalization Rate • Risk free rate of return • Equity risk premium • Small stock premium • Company-specific risk premium • Equals the discount rate • Subtract the long-term growth rate

  8. Cash Flow Capacity • Most recent year • Mean or weighted average • Another way to estimate cash flow capacity- • Projected Year

  9. Gradual Increase

  10. Erratic History

  11. Hockey Stick

  12. Sources of Market Data • Publicly-traded stocks • Iba data base • Pratt’s stats • Done deals • Zweig’s valuation survey • Other specialized sources

  13. Company Results • Net income • EBITDA • Cash flow • Owner’s discretionary cash flow • Revenue

  14. Discounts/Premiums

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