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  "notes": "The slide discusses the relationship between value drivers (return on capital, growth) and valuation multiples, referencing a specific UBS Warburg calculator.",
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      "kind": "callout",
      "text": "...if supported by the underlying value drivers",
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      "text": "Chart 5: UBS Warburg Global Valuation Group Target Multiple Calculator",
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      "text": "A word of caution, however! These are based on limiting assumptions and should be used with care. For example, margins, depreciation, taxation and rate of investment are all assumed to remain constant, and growth is assumed to continue into perpetuity. As a result, multiples obtained using these formulas are likely to over- or understate fair value.",
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      "text": "These fair or target multiples can be calculated, based on underlying drivers of return on capital, cost of capital and growth, using a discounted cash flow-equivalent approach. The Global Valuation Group’s ‘target multiple’ model can be used to quickly obtain a range of target multiples for a different input values. This model can be found at www.ubswarburg.com/research/gvg.",
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      "text": "We have summarised key multiples and their underlying formulas below. A derivation of the key formulas can be found in the Appendix.",
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      "text": "These formulas are most useful in identifying which factors have the greatest impact on a multiple for which you already have a value.",
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      "text": "But it is precisely those value drivers – particularly Microsoft’s high return on capital and high growth rate requiring minimal reinvestment – that drove the share price. In 1990 Microsoft’s future success was neither apparent nor impounded in the share price. But an investor who did see Microsoft’s potential and translated that potential into value driver estimates would have been willing to pay a much higher multiple.",
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      "text": "We do not need to know what the actual value drivers were in order to estimate a retrospective fair multiple, as we can work backward from a known share price.",
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      "text": "Valuation Multiples: A Primer",
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      "text": "Single-stage Target Multiples",
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