What’s it worth to you? Company Valuation Resources

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Contributors:  Cynthia L. Cronin-Kardon and Mia Wells

Valuation is used in business to determine the price participants are willing to pay or receive to buy or sell a business. Needless to say, the seller is looking to make as much profit on the deal as possible while the buyer hopes to pay as little as possible. Various resources can help determine the best price for the transaction. Listed below are some Lippincott Library resources to help students with assignments for a number of Wharton courses including FNCE207/728 – Corporate Valuation (which also has a course guide); FNCE250/750 – Venture Capital & the Finance of Innovation; and FNCE251/751 – Finance of Buyouts & Acquisitions.


 

Comparable Deals
You’ll want to search for precedent transactions in the industry of the company you are valuing. Several sources allow you to search for comps by industry (SIC code, NAICS code, or alphabetically by name).

BizComps is a database of business sale statistics which are based on small business sales transaction data. After searching by SIC or NAICS code, you’ll be presented with a list of recent deals. Select those of interest and you can run a “Transaction Analysis,” which will give summary statistics/multiples on the deals you’ve chosen. Ask to be logged in by a librarian at our Reference Desk.bizcompsborder

 

Business Valuations by Industry is a print source available at Lippincott Library ReferenceBusValIndusMerged Desk (call number HG4028.V3 B78). It includes detailed studies of actual mergers and acquisitions, including deal “tearsheets”. This source is arranged by industry and includes actual transactions from 2007 through 2009. Profiles of buyers are included as well as some some foreign transactions and deal terminations. This is a great resource when you want to profile selected, covered deals.

 

 

 

Betas
Beta measure the volatility of an industry or company within the market as a whole. Betas help to calculate the risk of an investment.

Industry BetasFor industry betas, use the Ibbotson SBBI Valuation Yearbook, a print guide held at our Reference Desk (call number HG4028.V3 S86).

 

companybetaCompany betas are in Bloomberg, available in the Yablon Financial Resources Lab here in Lippincott, or the Forum level of Huntsman Hall. Search for a company of interest and run the Beta function by typing BETA <Go>.

 

 

Best practices
It’s always smart to look to the experts for advice – these sources will give you tips and tricks when performing a valuation for a company within a certain industry.

BusRefGuidemerge
Business Reference Guide is a print source located at Lippincott Library Reference Desk (HD1393.25 .B87). This source provides several types of information which can be used for pricing businesses and franchises.  It is organized by industry and includes industry statistics from IBISWorld, “rules of thumb” by industry analysts, pricing tips, benchmarks, commentary, expenses as a percentage of annual sales and industry costs.

 

 

Standard & Poor’s Net Advantage provides industry surveys. One unique feature of this source the section included for every industry on “How to Analyze a Company in this

S&PIndustry”. To access this, click on Industries, select the survey of interest. Next scroll to the chapter titled, “How to Analyze a(n) […] Company,” which also contains a section on Equity Valuation as well as a glossary of industry terminology.

 

 

 

Company multiples
To track multiples of a company over time, use the sources listed below. This will help you price out the company itself or help you to compare it against a similar firm.

Multiples_VinceS&P Capital IQ provides lots of financial data including multiples. MBAs can access CapIQ via MBA Career Management, while Wharton undergraduates can come to the Yablon Financial Resources Lab and ask to be logged in by a librarian. Search for a public company of interest and look for Financials/Valuation in the left menu. You can change the date range to see multiples over time, as well.

 

BloomFA

Bloomberg is available in the Yablon Financial Resources Lab or the Forum level of Huntsman Hall. Search for a company of interest and run the Financial Analysis function by typing FA <Go>. Look for the Enterprise Value tab.

 

Past M&A deal tearsheets
You may find it helpful to look for past deals to get a sense of how many deals a company has done in the past, what were the specifics of a deal or how active the M&A market is in a certain industry.

Thomson ONE – note that this resource only loads with full functionality when using Internet Explorer. Once inside, scroll over Screening & Analysis, then Deals & League Tables, then M&A to select either a Quick Search or Advanced Search.

Zephyr – select Zephyr Advanced. Pick the variables to define your search. Below is a screenshot of a list of deals. You can click on any of these to get a detailed summary of the deal.Zephyr

This post may have additional information – What’s the Deal? Researching Specific M&A Deals

 

 

 

 

What’s the Deal? Researching Specific M&A Deals

Companies make acquisitions for two primary reasons: (1) to fill a strategic gap (products, resources (people), or capabilities) or (2) enable the company to enter a new market with a new revenue stream. Researching a company’s M&A activity provides insight into the corporate strategy. When researching a specific deal, we are often looking for deal financials and deal valuation. It’s also important to research the strategies behind the deal. We often want information on business drivers, overall strategy, execution plan, implementation, etc.

Let’s take a well-known deal as an example, eBay’s acquisition of Paypal. In 2002, eBay, the largest online auction platform bought, PayPal, a web-based payment service, for $1.5B. The deal was a perfect match – Paypal drove eBay’s revenues while eBay supported the growth of PayPal’s active user base. A decade later, it is evident that both businesses fueled each others growth. So how does one research a specific deal?

Start with Thomson One for deal information including deal financials, news, filings, and research.

Note that this database only works in Internet Explorer versions 7-9. Take a look at our blog post for an IE10 workaround or Chrome plug-in.

Go to Screening & Analysis => Deals & League Tables => M&A => Advanced Search. Continue reading

A League Table of Your Own

A League Table is a list of entities such as companies, teams, or individuals, ranked in order of achievement. In business, league tables most often refer to a list of investment banks ranked on the volume or value of such transactions as IPO’s or M&A deals. There are a very large number of combinations of league table variables (e.g. types of issues, country, time periods and currency). Here are descriptions of three financial databases that can help you construct a league table that fits your criteria.

(1) Bloomberg (available in Lippincott Library and Huntsman Hall)

Type LEAG and hit the green GO key.

The screen below is a list of investment banks ranked by amount of U.S. Bonds underwritten in 2013.

Bloomberg league default ok

There are many customization options. Click on:

  • Year (to choose dates from 1999 on)
  • Period (to choose year, half year or quarter)
  • Select a Market (to choose among markets for Debt, Equity, Structured Notes, and Syndicated Loans). You can also choose “custom markets” which will enable you to create a table based on detailed security, issuance and issuer data
  • Related Functions (to choose among league tables for M&A, Legal Advisors, Clean Energy, Muni League, and to create a matrix table)
  • View Ranks (to view a five year history and a detailed description of the table criteria)

Bloomberg also has hundreds of pre-formatted league tables with accompanying analysis. For a listing of these, type:

NI LEAG CRL and hit GO. Continue reading

Zephyr: Making M&A Searching a Breeze

Zephyr is a database describing worldwide Merger and Acquisition (M&A),  IPO, and Private Equity deals. Currently the file contains more than 1.1 million completed, announced and rumored deals.

A typical M&A search combines variables for geography, time period, deal type, and deal value. Creating customized reports for such deals is easy on Zephyr.

In the following example, we are searching for the largest 50 (ranked by value of deal) M&A acquisitions completed by public U.S. companies in the past 5 years.

Zephyr1

Clicking on the circled items will show menus with additional details. For example, the menu for “Deal Type” will display scores of options for deal types, sub-deal types, methods of payment, and financing.

Here are the variables chosen for our example:

Company Status => Listed or Delisted
Deal Type => Acquisition
Deal Status=> Completed
Geography => USA
Time Period => Last 5 years
Deal Value => Largest 50 Continue reading

Big Deal: Bloomberg’s M&A Database

Finding information about merger and acquisition transactions is simplified by the availability of several M&A databases.

A particularly easy to use but powerful M&A database is available through Bloomberg.

Type MA <GO> to access.

Bloom MA first screeen

The initial M&A screen gives an overview of merger activity, including lists of the largest deals by region or date, activity breakdowns by industry, and a brief League Table. Click the headings for greater detail.

To search for deals with specific characteristics, click on “Custom Search.”

Bloomb search screen

In this example, we are searching for all M&A completed acquisitions by public U.S. companies.

From the search screen click on RESULTS to display the default spreadsheet variables, then click EDIT COLUMNS to add or modify the variables.

In our example, we modified the default options to include data about the acquirer’s stock price following the acquisition, and downloaded the results to EXCEL.

Bloomberg excel

For other options for M&A deals see our Business FAQ on mergers and acquisitions. Also, take a look at our previous post on M&A Rumors.