Target valuation

Target valuation estimates the target's stand-alone and, where relevant, combined value for a transaction. Methods can include discounted cash flows, comparable earnings multiples and asset-based measures. The choice depends on available evidence, the stage of the business and the purpose of the valuation. Distinguish enterprise value from equity value, adjust consistently for debt and other claims, and identify which benefits are incremental to the buyer. A valuation is a range of model-dependent estimates rather than proof of the price that must be paid.