Valuation for Mergers, Buyouts, and Restructuring, Second Edition

Appendix B

Valuation Aids Software

The enclosed Valuation Aids CD-ROM contains a number of Microsoft Excel spreadsheets written to assist the reader in applying the models presented in this book. It includes:

• Spreadsheet Models: This file contains the Excel models used to generate most of the exhibits shown in this book.
• Equity Premium Calculator: This spreadsheet calculates the prospective equity premium implied by the 1-year forward P/E multiple of the S&P500 index. Additional inputs required are: 5-year consensus growth rate of earnings, the long-term growth rate of earnings, present and long-term payout ratios, and the compound yield on the 10-year government note benchmark. The prospective equity premium is defined as the difference between the rate required by investors on a market portfolio and the long-term government yield. The required return on equity is the rate that equates the present value of the future dividends of the market portfolio to the value of the portfolio. See Chapter 3 for details.
• Equivalent Multiple Calculator: This workbook calculates equivalent forward or trailing valuation multiples from any given multiple and parameters values characterizing the earnings of the firm. It permits calculating a different multiple from a known multiple, checking a given multiple against another known multiple, and adjusting comparable multiples for different debt ratios and growth rates. In each case, the corresponding common-size income statements (for $100 revenues) ...