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  "documentTitle": "Bear Stearns | Investment Banking Pitch Book | 36 slides",
  "authorId": "bear-stearns",
  "authorName": "Bear Stearns",
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  "presentationDate": "2005-01-01 00:00:00",
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  "notes": "Part of a DCF Primer document.",
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      "text": "The terminal value should generally reflect a public market valuation when valuing a company for an IPO.\nThe terminal value should also reflect a public market valuation when valuing a company for a strategic acquisition in which the buyer does not plan to sell the target in the foreseeable future and for which synergies are explicitly included in the forecast.\nWhen valuing an acquisition target for a buyer that is expected to “flip” the acquired company, it may be appropriate to use a private market value for terminal value if synergies are not included in the cash flow projections. Note that private market multiples usually reflect synergy value, trophy value, the impact of defensive posturing, etc., and this value should not be double-counted through the explicit inclusion of synergies in the forecast.\nThe terminal value multiple should reflect long-term growth expectations beyond the forecast horizon and should be applied to a normalized level of cash flow. The terminal value multiple may be less than the current EBITDA multiple to the extent that the company is in a high-growth industry or the current multiples are inflated due to short-term fads in the marketplace.\nCertain industry exceptions may exist for which it may be more appropriate to use multiples of revenue, EBIT or net income as the basis for calculating terminal value.",
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      "text": "Terminal value should be calculated using one or more of several methods, including comparable company multiples (e.g., EBITDA, EBIT and unlevered net income) and should be checked with the perpetuity growth method. The type of multiples used (i.e., public market versus private market(1)) will depend on the objectives of the DCF analysis (i.e., IPO versus M&A deal).",
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      "text": "(1) A private market multiple refers to an “acquisition” multiple.",
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      "kind": "title",
      "text": "Calculating the Terminal Value—Exit Multiples",
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