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There are following two valuation techniques:
Market to Book multiple
Price to Revenue multiple
Enterprise value to EBIT multiple
Discounted Cash Flow (DCF)
NPV, IRR, or EVA based Methods
CF to Equity method
The disadvantage of comparable methods is that To apply this method, we have to look at comparable transactions in that industry paralleled to a business with a similar model and then compare them by the relevant ratios and multiples such as Enterprise Value-to-EBITDA..
The disadvantage of DCF method is that it relies on Weighted Average Cost of Capital (WACC) and The risk-free rate comes from the Treasury bond rate at the time where the projections are being considered.
Oct 15th, 2015
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