Valuation Analysis is the process of estimating the market value of a financial asset or liability. Valuations can be done on assets (for example, investments in marketable securities such as stocks, options, business enterprises, or intangible assets such as patents and trademarks) or on liabilities (for example, bonds issued by a company).
Activities included under valuation analysis cover, but are not limited to, the following:
- Trading Comparables Determining the current value of a company by using a sample of ratios from comparable publicly traded companies.
- Precedent Transactions Determining the current value of a company by using a sample of ratios from comparable transactions.
- Discounted Cash Flow A valuation method that uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value.
- Leveraged Buyouts Analyzing the acquisition of another company using a significant amount of borrowed money (bonds or loans).
Request & Guidelines Provided
- Asked to work closely with a Portfolio Manager to arrive at intrinsic value for a steel company
- Provided name of the steel company, available secondary research, broad outline of the equity report, and preferred valuation methodology Methodology
- Constructed a financial model by understanding the intricacies of the company's business and sector dynamics
- Each of the company's revenue streams were modeled and driven separately. The costs were reclassified keeping in mind their nature and relation to revenues
- Used the DCF valuation technique to arrive at the company's intrinsic value
- Used guidance from ratios and multiples obtained from public market comparables to determine the value of the target company
- Prepared a detailed equity memo using the top-down analysis of the company Final Deliverable & Client Takeaway
- Provided a flexible company financial model and equity memo to evaluate the investment opportunity
- Financial modeling is the process of forecasting the performance of a certain asset, using the relationship between the operating, investing and financial variables.
- Activities included under financial modeling cover, but are not limited to, the following:
- Projected Financial Statements
- Presenting a company's historical and forecasted income statement, balance sheet, and cash flow statement.
- Operating Statistics
- Equity research is the process of analyzing the ownership in a company, public or private.
- Activities included under equity research cover, but are not limited to, the following:
- Initiating Coverage
- Issuing detailed research on a specific stock in an effort to cover the security and give perspective on the competitors in the sector.
- Updates for News and Earnings Releases
- Analyzing the impact of news and earnings on the company's operating and public market performance.
- Industry Research Providing an overview of the quantitative and qualitative aspects of a particular sector and analyzing investment opportunities arising in that sector.
- Wall Street Research Summaries
- Summarizing key learnings from equity research report(s).
- Portfolio management is the process of selection and management of portfolio companies for private equity players, M&A specialists, and venture capitalists. The process helps the portfolio companies to improve the decision cycle time and the quality of decision making through portfolio analytics.
- Activities included under portfolio management cover, but are not limited to, the following:
- Preparing Board Materials
- Preparing financial reports, investment memos, industry reports, and other material for board meetings.
- Evaluating Strategic Alternatives
- Finding and assessing the options available for management to fulfill the long-term goals of the company.
- Portfolio Valuation
- Analyzing the market value of the holdings/assets in a portfolio.
- Market analysis is the process of understanding the key aspects of the market such as size, consumer profiles, competition, trends, etc.
- Activities included under market analysis cover, but are not limited to, the following:
- Market Performance Monitoring
- Monitoring the stock price movements and analyzing the reasons behind the movement.
- Industry & Business Due Diligence
Golden Hills Capital offers advisory services to corporates, entrepreneurs, and portfolio companies; assisting them to streamline their operations, estimate growth opportunities and exit opportunities, and raise growth capital.
Golden Hills Capital works diligently with senior financial management team by building and maintaining flexible models to support internal budgeting and reporting criteria, and assisting management in evaluating additional projects and investment opportunities. These services support the clients in influencing the finance department to handle day to day operational control, allowing shifting their own focus to a further active role in the macro aspects of the business to enable strategy execution.
Review and monitoring Operational Metrics
- Working capital optimization
- Sensitivity Analysis
- Financial Modeling
- Operational Modeling
- Make vs. Buy Outputs
Golden Hills Capital supports its clients leverage customer data to produce strategic insights and offer comprehensive business intelligence and analytics solutions while adding larger value to their methods. Through its data analytics solutions, Golden Hills Capital assists its clients across industries together with insurance, retail, financial services, banking, healthcare, energy, and consumer products among others, to make critical tactical and strategic business decisions.
- Predictive Modeling / Classification / Clustering
- Reporting and Dashboards
- Text Mining and Analytics
- Cost efficiency
- Risk management
- Competitive advantage