Hi guys. Welcome to this session brought to you by Financial Edge Training.

Today we're going to be looking at the football fields. We're gonna have a short, sharp, half an hour.

I'm gonna show you how to build the football fields. We're going to do it on Red Bull.

We're going to use their real numbers.

We'll do some real transaction comps, real trading comps, real DCF, et cetera.

So I'm gonna be working in an Excel file.

The Excel file is right here.

And your question is, how do I get a hold of this? If you look at the bottom of your zoom screen where it says participants and chat and raise hand and all that stuff, if you click on resources, so there's a little buttons called resources at the bottom of your zoom screen.

If you click on that, there's a link and it will take you through to this page here.

And on this page, if you just scroll down in green, there are the files we're going to be using.

I'm going to be building in the empty file.

Alternatively, if you want to use the full file and just have a look at the answer and just basically follow along with me, you don't have to build along if you don't want to.

Okay, great guys, let's get going.

So really quickly, I need to introduce you to the world of football field if you've never seen it before, but then we'll get building.

So a football field, it is a visual summary of a company's value.

So let's have a look at an example here.

I've got four different valuation techniques.

I've got trading comps, and then next underneath that I've got transaction comps and then DCF and then LBO.

I wanna see some values next to each of them.

And for my trading concepts, I've actually got four different values on screen.

We've got EV, EBITDA, FY1, FY2, et cetera.

Each of those produce a valuation range.

So my clients, maybe my client has come to me and say, hey, I want to buy Red Bull.

How much should I pay? And we would recommend, okay, if you just wanted to buy a little bit and Red Bull would continue to be a standalone company, if it would continue to be a standalone company, then we would recommend somewhere within the ranges on the screen, somewhere between maybe those two red bars there.

However, and sorry, we'd add a DCF into there as well.

However, I don't want 1% or 2% or a minority stake.

I want to take it over.

Well, if I want to take it over, then I'm gonna have to go for a slightly different valuation technique.

I'll go for transaction comps and DCF with synergies.

They will give us takeover valuations and I can see those two techniques give us a valuation between those two blue lines there.

So what we need to do is we need to populate these numbers.

Okay, let's get into that Excel file.

Here it is. I want to go along to the valuation summary tab.

It's one of the orange tabs along the bottom.

And basically this file has loads of different valuation techniques. We've got a transaction comps valuation, DCF valuation, trading comps valuation, loads of them all built up.

We're going to bring them all together onto this valuation summary tab.

Then at the bottom, our graph will populate here.

Very nice. So I'm on the valuation summary tab and I'm gonna start with my trading comps.

I want a valuation here in these orange cells.

So how am I going to do that? Well, the first technique we're going to use is trading comps on an EV CY2 revenue basis.

So this means ane is going find a minimum multiple and a maximum multiple using the EV CY2.

Let's go to trading comps.

Let's have a look for the EV CY2 and let's just find our way around the file a bit.

So I go to the trading comps tab, and in the trading comps tab we've got lots of comparable companies to Red Bull.

I can see we've got Coca-Cola, Keurig, Dr. Pepper, Monster, et cetera. This is a bit of a long list.

They're all similar, similar to Red Bull i.e., we want similar size, similar products, similar growth margins, et cetera.

But there's too many here. There's too many.

So we've tried to come up with a short list of the most comparable companies.

So how would I do that? So again, choose maybe similar products, similar size, et cetera.

But two important ones for me, if I go down to this Red Bull line here is I want to look at Red Bull's margin and Red Bull's growth.

And I'd like to get two companies that are vaguely similar to those.

Well, if I have a look at the comparable companies, see the top three are all vaguely similar to Rebel's Margins. That's great. And if I have a look at the growth, again, there is some disparity in those three companies, but the top three are all in the right ballpark.

All of the others have figures that just really go quite far away.

So it's the top three that I'm definitely focused on.

We have shortened it down to just two of the top three.

So Coca-Cola, and Monster.

So which of these multiples do we want to use on the valuation summary tab? It said let's start with EV CY2 revenue.

Let's go to the trading comps. Let's have a look at that.

Here's my EV revenue, but I see that we've got more than just CY2.

So I've got LTM and then I've got 2024, so that's CY1.

That's the year we're currently in. So that's the first forecast year.

And then I've got CY2 2025.

How do I choose between the three? Well, there are pros and cons to each of them.

The big pro to LTM is that the numbers are real.

I can look at Coca-Cola's, real multiple.

I can see it in the market. If someone had a gun to my head said, do you believe those numbers? I'd say, yeah, yeah, absolutely.

I completely believe in them.

But most people would probably shy away from the LTM.

And the only real con, the reason we don't really like them is that they're backwards looking.

The LTM, they're in the past.

That's the value that the current owner, that's the they've got. It's kind of happened. I want to be looking into the future.

If I'm going to buy Red Bull, that's the number I'll need to pay, and that's the earnings, that's the revenue that I'll earn.

I'm definitely more looking to more towards the future and most people would use the future multiples, but then it's a toss up between CY1 and 2.

So how do I feel about them? CY1, the numbers are quite close.

In the future I can estimate those future revenues will with quite a lot of confidence.

CY2 is a little bit further away.

I'm taking a bit of a risk coming up with those future figures.

So I prefer CY1.

Any reasons why we might look not like CY1, if CY1 was a weird year, if there was a big inflation spike happening at the moment, if there was a big restructuring happening within the business, do you know what? Maybe we'll go with CY2.

Once everything has calmed down, particularly for a company, very high growth, well hang on, let's just, let's just let it just find its itself a little bit.

Maybe get rid of some losses.

CY2 might be more indicative of the future.

So for us with Red Bull, it's really a toss up between the two.

We're gonna go and CY2, but we really could have gone with CY1 as well.

So let's go get that first multiple.

I'm gonna press equals min.

We've got this minimum column here and we've got a maximum.

So let's go with equals min and I'm the minimum EV CY2 revenue mode.

It's on the trading comps tab.

We were just looking at it and it's the minimum of these two cells here.

Now top tip for football fields, context is everything.

So I don't just want to take the minimum of 2 or 3 or 5 or 10 companies.

I want to make a note of what the company is.

So the company has the minimum multiple. Here is Coca-Cola.

I want to make sure that I make a note of that here on my football field.

The fact that it's Coca-Cola says to my clients or says to my boss some context, Hmm, I think Bel is better than Coca-Cola.

Therefore I won't be hanging onto the low valuation and the low multiple.

I can afford to ignore it a bit and go a little and think a little bit higher.

Context is everything.

Let's do the same in the max column.

So here I want the maximum of those two multiples.

I go back to the trading conference, here's my EV revenue.

It's just those two cells there.

Again, don't just grab the 6.6 who, who is providing that 6.6 and it's Monster.

Ooh, ooh, monster. Very, very similar to Red Bull.

If I wanted to to kind of hitch myself to one of those wagons to Coca-Cola or Monster, I think I'd be more towards Monster.

Okay, rebels growth, rebels margins heading in that direction more than Coca-Cola.

Great. So I now write Monster beverage above and I've got my minimum and my maximum multiples.

Now I just need the actual revenues for Red Bull.

I need to apply that multiple to Red Bull's revenue and then I'll find their enterprise value.

Let's go populate this little table up here.

Let's go grab Red Bull's revenue and EBITDA in the LTM year and in the CY1 year and in the CY2 year, we've got all of that available in a three statement model fold.

Red Bull. If I press equals and just click a little along in my tabs at the bottom, I can see in this kind of yellowy orangey tab, we've got a Red Bull model.

Let's go have a look there. Let's find the revenue figure.

If I scroll down to the income statements in row 54, I see their total revenue and I can see 10,554.

That's in the LTM year, the last actual year.

And I can copy that to the right.

Great guys, let's go find the EBITDA as well just while we're here.

So press equals, go to that rebel model tab, find the EBITDA, it's in row 60 and I can grab the LTM, it's in cell F63,134.

Press and copy it to the right now.

Which one will we after? When in this first valuation method that we're using here, we're using that EV CY2 revenue.

So I want to take equals that multiple and then I want to multiply it by the revenue in CY2.

So that 12.5 billion euros, ripple Bull Rebel is a a Euro company.

I'm gonna lock onto that and copy it to the right.

And oh, we've got our first valuation for Rebel. Amazing.

It's somewhere between 67.9 and 82.34 billion euros.

Great. That's our first valuation technique. We want to come up with five of them here on this screen.

And our second one is using EV CY2 EBIT.

Let's go do the same thing then. So equals min, we'll go a little bit quicker.

Now I go to the trading comps tab, trading comps tab in blue and I've got EV EBITDA section just here.

I want EV CY2 EBITDA, so that's my 2025, the minimum or of those two cells, again, that was Coca-Cola.

So give your boss, give your client some context.

Coca-Cola providing the minimum multiple.

And then let's go and do the max function after trading comps.

Find the two cells. There they are.

This time we're back to Monster. Great.

Now quick and write, which one will we doing here? Well, it's 16.1 multiplied by the up to the EBITDA line.

Find Red Bull's CY2 EBITDA and lock onto it.

So press F4, get those dollar signs and copy to, I need to make sure that I actually multiply by the 16.1 and multiply that by their CY2 EBITDA lock onto that copy to the right.

So we've got our second valuation somewhere between 60,000,000,078.

The one above, somewhere between 67 and 82 billion. Great.

So they're in the same ballpark as each other.

Always comforting to see that.

Okay, so we've done our first technique trading comps done and now move on to DCF.

Now, DCF is gonna be slightly different on the DCF tab, which is already done.

We've got a data table, give me us lots and lots of enterprise values. We've got 25 of them. We need to choose a range within that.

We don't want it to be too wide, don't want it to be too narrow either. Otherwise kind of says we're we're promising to someone, this is what the valuation is.

This first one, let's, let's just go and have a look at the DCF tab, interrogate it before we start linking to it.

So I go to the DCF tab, scroll down and roundabout rows 53 to 60, we've got the data table.

Now this data table has the implied enterprise value that's been built up from this enterprise value in row 39 and there's a whole DCF behind that. So we don't need to go into that right now.

We've run a data table on that enterprise value and we've varied the long-term growth from 2.4% to 2.8 and we varied the WACC from 6.7 down to 6.3.

The first thing I need to do looking at this data table is work out where's my minimum and my maximum.

And in this case I've got my minimum with the lowest growth, highest whack, and the maximum is at the opposite.

However, we've got an opportunity here to create the range as wide as we like.

At the moment. I'm feeling that's a little bit wide.

I'd like to narrow it if I can imagine you were trying to sell a car, you went to a car dealer and you said to the car dealer, Hey, what's my car worth? And they said somewhere between 72 and 87,000, you'd really want an expert to give you slightly narrower range.

They're the experts. So we'd like something than that go from 75 to 82 and you might notice that we've grade that area out to indicate that we're going for the narrow narrower range.

If we go back to the football field, you might notice context is everything. Context is everything.

We've got to be telling someone what the assumptions are.

So those highlighted cells that I made on the DCF tab, they're going to be using a WACC of 6.6 and growth of 2.5 and then 6.4 and 2.7.

So let's link to those cells.

I press equals I go to the DCF tab.

I'm going to grab the low of the orange self at 75.

I'll put my formula underneath and then the max, the 82.

Great. So we've got ourselves another valuation technique, health and safety warning though health and safety warning here, a lot of DCFs will have switches that allow you to change either the scenarios in your DCF or to turn synergies on or synergies off.

If you've got that kind of switch, then that means these numbers here are to be changing all the time, every time you turn the switch on or off.

So this is one of those rare instances in Excel where you might consider hard coding your numbers so that whether that switch changes or not won't affect these numbers here.

That's valuation number three. Great.

I've got third range in orange here.

All of those three were standalone valuation techniques.

So let me just whip that down here.

So they are standalone valuation techniques.

If I'm just going to buy a percent or two of Red Bull, these are the valuation ranges I'd be looking at.

But I want to move on.

I'm my client is thinking about buying Red Bull.

We're going to look at two more. We're going to look at EV including synergies and EV using transaction multiples.

Let's have a talk about the synergies. Then again, context is everything.

I want to tell my client and boss the average synergies percentage of target LTM revenue.

And this indicates how aggressive we're being with synergies.

Let's go have a look at the transaction comps tab where we've got some synergies, numbers.

Let's go to transaction comps, or deal comps, or synergy comps.

And here I've got lists and lists and lists of various transactions, but it's what's going on in column N that I care about the most.

In column N, we've got synergies as a percentage of LTM revenues.

Some of these transactions reported their synergies.

So AB InBev bought Saab Miller many years ago now and they reported the synergies that they expected 6.3% of L TM revenue and we've got a few more transactions at 8.9, et cetera.

We've taken an average of them on the synergies tab.

The average right here is this 8.2% and it's that number that I want to report on the football fields.

I want to show my boss the context.

This is how aggressive we're being with synergies and we're actually linking to real deals.

So valuation summary, I just want to link to that 8.2%.

So pre equals go to the synergies and I just want to link to that 8.2 and I want to lock onto it, copy to the rights rates.

So what we're now going to do is we're going to take the DCF standalone value of 75.4 billion and we're going to add onto it book the value of synergies.

If I buy this company, what value of synergies would I expect to get? That number has been calculated using a DCF.

And it's on the synergies tab at the moment.

That 8, that 8.2% has translated into synergies per year of 862.

They then flow down, flow down, flow down a DCF, and they get us down to the present value of synergies here.

13,868, 13.8 billion euros.

We're going to add that onto the DCF valuation.

So for value of synergies, let's go grab that 13 billion press equals go to the synergies tab, find that 13.868. There it is down at the bottom and I'm going to lock onto it and copy to the right.

I want to add the 13 onto the standalone DCF.

Where's the standalone DCF? It's there, it's look at the valuations.

They're a bit higher. Now in my takeover techniques, we've got to, our first range has gotten to 89 billion, up to 96 billion.

So because we're doing a takeover, we're expecting to pay that control premium and we have to pay it because we're going to access those synergies.

I'm willing to pay more for that. Great.

So that now gives me the first of my takeover techniques.

Okay, now remember if you've got any switches going on, you may want to hard code that number there.

I'm certainly not gonna do it here, but you may want to if that's happening in your models.

Transaction multiples, I want to take the minimum and it's EV LTM EBITDA now.

Now with transaction multiples, it's nearly always LTM EBITDA.

I'm looking at deals that happened in the past and because they're in the past are the LTM profits up to the deal date.

It's very hard to find the forecast one year from the deal date or two years from the deal date.

And that's what people thought back then.

If it's a private deal, you're lucky to be getting LTM.

So we focus on the LTM when we're looking at transaction multiples, let's go see if we can find the minimum.

It's on the transaction comps tab and I'm going to scroll down.

And in rows 29 to 32, we've got a short list of transactions.

We've got Keurig green mounting, buying Dr Pepper, Pepsi, buying SodaStream, Cott buying Primo and Coca-Cola buying Body Armor.

So I want the minimum of just those four transactions and I've got that EV EBITDA figures over here in column L.

I'm going to find the minimum of those four.

Got that.

I then want to find the maximum as well.

So again, go to transaction comps, find those four cells, EV EBITDA, there we go.

The maximum is SodaStream.

Great. Now Inus are multiply each of these, each of these multiples.

Buy, wait for it, wait for it, wait for it.

EBITDA LTM, okay, don't go CY1, don't go CY2, it's the LTM EBITDA.

So I scroll up to the top, find that EBITDA here, there it is, and I lock onto that, copy it to the right.

And sadly we've got something really weird that's happened here. Really, really weird. My transaction multiples give me a valuation range 49 to 77 7. That's lower than my standalone techniques.

This is very strange.

So some context is really useful here.

Let's go back to transaction comps and just have a quick look at this for a quick 30 seconds.

And what I see are four deals that are just not the same as Red Bull.

Okay, I've got Coke buying Body Armor energy drink, which is great, much smaller, much, much smaller than Rebel, a 10th of the size.

But also it just doesn't have the market presence. It doesn't have the branding, not EV, not anywhere close to Red Bull.

The high multiple is Pepsi buying SodaStream.

So SodaStream does have, well-known brands, but it's just not the same.

I'm going to argue that Rebel is better than these deals.

And qualitatively it's still useful to include these deals in the football field because you can argue why Rebel does not sit within and why you should be paying more.

And actually the valuation range is not that it should be ignored, but it could be seen as too low a line in the sand almost.

Now we're not going to do the LBO valuation, so we now just need to bring all of these orange and green cells down into this table here.

If I just show you how to do the first one, I need the minimum EV CY2 revenue.

So I press equals, I scroll up and I just link to that first number there.

Then I do the same in the max column just here.

I press equals link up to that 82,365.

And then I just need the difference in between them.

So I take my max minus my min, And if I go down to the graph, ah, the first number has appeared. That's great. The first range has appeared.

So we just need to go and populate these three columns. Let's do that quickly now. So equals and I link up as well and I can then just copy down the differences.

Fantastic. That's really cool. It's really useful guys.

Let's go down to the graph. Let's see what we find.

Nice, nice, nice. A lovely football field that's produced itself.

Fantastic. Now, if I was having to plot a standalone valuation range, let me change my pen here.

I would go somewhere in this blue area here.

Okay, I can see, I can see that the valuation is somewhere between about 65 and kind of 81, 82 billion.

If I was looking at a takeover, I would probably try to ignore those multiples.

I think it's useful to talk to my boss about, but I don't think that's helpful for finding out a number.

Instead, I'm going to focus on the DCF with synergies.

I think rebel is just better than those other deal comms.

Lastly, if I did have an LBO, the LBO that you'd have in this would be quite low.

An LBO on rebel only works if it's bought at a really low valuation and then it's got the opportunity to grow and to basically earn these very high IRRs needed for LBOs to work.

So guys, that gives us a really short, sharp intro to the football field.

I hope you found that useful.

Of course there is more you can find on Felix.

If you want to find out how to actually build the graph, listen to the videos and we talk you through the steps to take.

Otherwise, guys, I hope they found that useful and see you again on another Felix Live really soon.

Bye. Enjoy the rest of your day.