My name's Maria Weber, I'm one of the trainers at Financial Edge, and I'm going to be doing today's session on football field fundamentals.

So we're going to set the scene with a couple of slides.

You've got access to those slides, and then we are going to apply this in a case.

What we're going to start talking about is, first of all, just what is a football field? Then we're going to talk about some considerations, and then about how your data should be prepared, but then we're actually going to go do that in the Excel spreadsheet, and we will then do an example of a football field in our Excel case.

So what is a football field? A football field is just a summary of the different valuation numbers that you've come up with for a client.

Right? So it's a visual representation of different valuation ranges. Now, unless you work in, say, something like equity research, it would be quite unusual for you to come up with one number.

Right? Equity research analysts, they say, "Yes, this is the target price." But if we're doing other advice, for example, advising a company on an IPO, or if they're looking at strategic options, what about an M&A? What about an LBO? Are you attractive to an LBO, a private equity fund? We would come up with a range of valuations. Okay? Now, the football field is the last thing that you normally produce because there is a load of valuation work that goes on behind it.

But the football field is normally one of the first things that you will discuss in a presentation. So if you've got a presentation or a pitch to a client, yes, you have your exec summary and stuff in the beginning, but when you start talking about the valuation, the football field frames that conversation. Right? Now, we're going to be comparing the different techniques, the different approaches to valuation. So obviously for this session, you do require some valuation knowledge, but that's not what we're focusing on.

We're focusing on just collating the knowledge and putting it all together.

But I'll show you at the end where you can obviously find in Felix the valuation stuff that goes on behind the scenes.

Okay, so there is our big picture football field.

Then if we just start going into a little bit more detail about what should be on the football field and what makes a good football field and a not such a good football field. If we go onto the next slide, there's a few things we need to decide.

The first thing is what value are we going to be showing on the football field? Are we going to be showing enterprise value or equity value, share price? Now, if you are advising a private company, the discussion normally centers around the business value, the enterprise value. And then, yes, you negotiate the bridge items, and you end up with the equity value.

But the initial discussion, negotiation around enterprise value.

So normally for a private company, that is what you would see on the football field. However, for a public company, public companies are traded.

They have observable share prices.

The management of that company and the shareholders of that company are going to want to know, okay, well, how does the value you are showing us compare to where the shares are trading now? Okay, so we would normally, for a public company, have a share price equity value on that football field.

The next thing that we've got to think about is, okay, well, there's various approaches to valuation. Which methodologies are we going to include on the football field? Now, this will be driven by the assignment, right? Why are you advising this client? Is it because they want to go public, they want to do an IPO? If that is the case, we're going to focus on the standalone valuation techniques, and we've got this summarized on the next slide.

But standalone techniques are things like trading multiples, a DCF. Those are your standalone techniques. But if we're advising on a transaction where there's going to be control involved, right? So an M&A or an LBO, so not just looking at a minority stake valuation, we would then look at things like transaction multiples as well, DCF including synergies, and LBO if that is viable. And we'll talk about what do we mean by viable when we get there. Then finally, we've got to make sure that our football field can facilitate a discussion, right? So yes, in a presentation or a pitch, you will have backups where needed, you will have appendices, but you want to include enough detail on the football field chart itself and in your spreadsheet that goes into preparing it so the numbers are at your fingertips. You know what you're referring to, what was the growth rate, what was the WACC, et cetera.

Okay, so that is a balance. Obviously, you can't have a super cluttered football field, but we do want to try and include enough detail to facilitate a discussion.

And then we bring everything together on one page, and then we discuss the ranges. Moving on to the next slide. This is about preparing the data to go into the football field, and we're going to be doing this together in a moment in Excel.

But just a few things to point out from a setup perspective that make the football field a bit more useful is we've already mentioned this point about stating key factors in the labels, right, where you can. So if we're doing a DCF, what was the WACC rate used? What was the growth rate used? What's also very useful is instead of having the different techniques kind of scattered in between each other, is to group the standalone methodologies together, so your trading comps, your DCF excluding synergy, and then group the controlled valuation methods together.

Because we know controlled situation, there's a control premium, okay, and so it's useful to see those M&A, LBO valuations in the same place.

Now We are going to be creating-- Well, we're not going to be creating the chart from scratch, okay? Chances are you will have a template to complete.

If we've got time towards the end of the session, I can show you basically how the chart would be done. Okay, and we also have a playlist on actually creating the chart. The focus on this session is more about where do we draw the numbers from and getting them into that chart.

But to draw the chart, we do need this detail here. We're going to put a difference column in because that's how the chart populates. We'll worry about that when we get there.

And then finally, it depends what you're showing on your chart, but if you're showing equity value, you're going to need to go over that bridge from enterprise to equity value because very often, we actually value a business on an enterprise basis, and then if we're showing the share price, we would need to go over that bridge.

So it's also quite useful to just in your spreadsheet have the bridge items there, and I'll show you what I mean again when we get to our Excel file. We are almost there. One more slide to just set the scene.

So I think we've already mentioned, put your key assumptions in the label.

We're doing a stacked bar chart. We're going to see what that looks like.

Now, always specify what units you're working in, right? So are we working per share, total equity value, enterprise value in millions, billions, thousands? And then we'll talk about the LBO. Okay, so it says here, "If realistic, include what a PE buyer would pay." So we'll include that in our Excel spreadsheet. And then very important, because the company that we're looking at is a private company, but guys, if you are advising a public company, you are going to want to put their current share price on the chart. Okay, we want the current share price on the chart so that we can then see how does our valuation compare with what is on the chart.

Okay? And then we'll talk about this in our spreadsheet, but the purpose of the football field is to see where the bars overlap each other. We're trying to triangulate.

Valuation is inherently uncertain, but if we've used various techniques and we can see that they overlap in a certain range, that gives us some comfort, okay, this is a reasonable valuation range, and that is what we're going to be focusing on in our Excel spreadsheet.

So that brings us to the end of the slides.

Welcome to those of you that have just joined.

If you have just joined, I'm just putting the link to the materials in the chat. Okay, if you don't have access to the chat, Topics in Felix, navigate to Felix Live, click on the link, and you will then find all the tiles of past and upcoming sessions and come to the upcoming one coming soon. The recording will be there as well next week.

Right. So we've got two files. I am going to be going pretty quickly, so if you would prefer to just follow in the fully completed file, by all means, download that and work in that.

I'm going to be using the empty file, and we're going to be working together in that. Before we do so, are there any questions at this point? Just going to have a water break. I don't know if it is as hot where you guys are, but I'm in London, and it is sweltering, and unfortunately, I do not have air conditioning. So I've got the fan going, but it feels like nothing is actually happening.

But anyway, we can make it.

Okay. Any questions before we move on? If not, let's first of all familiarize ourself with the spreadsheet. Okay? Because when you open it up, it's saved on the valuation summary tab because that's where we're going to be doing the work.

But there is loads of work that actually go into producing this. So if we just go back through the tabs, if we start at the beginning, let's just have a quick understanding of what goes into what we're going to be doing.

So we've got a case study here, and the case company that we are looking at is Red Bull. So Red Bull is a private drinks company, energy drinks company. And we are trying to come up with a value for them. So imagine Red Bull has come to you, they want advice on options, right? So it's not specific that, oh, they've received a bid or something.

It's like, no, show us our options. So we would do a standalone valuation.

So if they were to list and go public, post trading, once they've listed, what do we think the value would be? Then we would say, "Okay, well, if you were to do an M&A, what would that valuation look like? And would private equity, LBO, would they make a good bidder for this? Would this be something that would be attractive to them?" So in order to do all this valuation work, we need to understand the peer set.

So on the accounting tab, we've got some peers.

We've got ratio analysis to understand the dynamics, the financial characteristics.

Then if you go to the Red Bull model, this is the company that we are actually trying to value. So obviously, we need to understand their financial metrics. So we've got a forecast income statement, balance sheet, and cash flow statement, and some historics in as well, so that we can understand things like growth, margins, all the things that are going to impact the valuation.

So we can form a view on where to place Red Bull within the peer set.

That then brings us on to the trading comps section.

Now, this is for teaching purposes, so we've included lots of tabs.

So we've got like to do the trading comps from scratch for a couple of companies.

Then we've got backup sheets for those companies.

But the one we really care about, where we're going to be drawing the data from today, is this trading comps tab. So if we just have a look at the long list of peers.

We know Red Bull, energy drinks company.

Okay, so we start out in the beverages industry.

But then we can't go to a client and give them a massive valuation range, right? They're paying us to come up with a view. Okay? We're not going to give them one value because that's also a bit, I don't want to say suspicious, but it's like, okay, valuation's not certain.

But they also want us to have an opinion and narrow down the valuation range. So in the initial peer group, we need to just think about, are there any peers here where we actually think they're not a good comparison for Red Bull? And so in the initial peer set that we've got, we've got some companies, even just by nature of the business, that are quite different.

So yes, they're beverages companies, but we've got some alcoholic beverages companies in here, like Asahi, San Miguel.

And so we would say, okay, we should maybe exclude those.

Then what we need to think about is, okay, we've got, say, soft drink companies, we've excluded any alcoholic beverages companies, but now we need to start thinking about, okay, well, where do we think Red Bull fits in? Not just business-wise, but metric-wise as well.

Are there any companies here that are very slow growth, low margin? Because Red Bull has got-- and here we've got the data for Red Bull from the model. I know this is a massive spreadsheet, but if you go to the right-hand side here, you can see we've got relatively strong revenue growth.

We've got good margins. So what we've then done is we've narrowed down this range. We've narrowed down this list to a shortlist. Okay? So we have got this trading comps shortlist, and we think the two companies that are good comps is Coca-Cola and Monster. Now, you're not necessarily going to have two.

It obviously depends on the company you're valuing, the industry.

But in this case, we've said, okay, we think these two are actually the closest. But like I said, that list could be longer.

Right. So that is what we're going to be drawing from for the trading comps.

And already we've made some decisions to narrow down this range that we are looking at. Next, if you go down the tabs, we've got a DCF for Red Bull, so discounted cash flow.

We do have one value for Red Bull, right, in this DCF because we are looking at one long-term growth rate, one WACC, one scenario. So we do come up with one enterprise value. Now, we don't want to put one enterprise value on the football field because that will just be a dot on the football field.

Right? We want a range. Now, it's not really advisable to just randomly add on.

So to say, "Oh, this is the enterprise value from the DCF.

Let's just increase it by 5% for the max and decrease it by 5% for the min." That's like, okay, the client could say, "Why did you pick 5%? Well, you could have picked 6%, 7%, 10%." That's not really defensible. Right? You got to defend your valuation. Okay? I know defend sounds like you're being combative, but it means you've got to believe in it. You've got to be able to talk about it.

You've got to be able to justify what you've done.

So rather than just randomly add on to the DCF, we would use the sensitivity analysis that we've done.

So in the sensitivity table, we have flexed the long-term growth rate and the WACC because those are the two single inputs that have the biggest impact on the value.

And so we would then pull our numbers from there.

Then we've got the WACC tab that we obviously need to feed into the DCF. We have then got the transaction comps.

So transaction comps, now we're looking at a control situation.

We're looking at M&A. So we've got, just like with the trading comps, a long list of past transactions, and then we need to try and narrow this down. We're not going to put the long list range on the football field. We're going to say, okay, some of these comps aren't good comps. The companies that were being bought were very different to Red Bull. Or these are very old comps.

Or this was a distressed sale where the multiple was super low.

So you need to do your work going through these comps, make the decision to narrow down that range, and we then have this comps shortlist. Just like with the trading comps, we've got the transaction comps shortlist. Okay? Then we've got a DCF just valuing the synergies because if it's a strategic buyer, so say Coca-Cola buying Red Bull, would there be synergies? What are the expected synergies? So we did a bit of work around that, and we've got the present value of the synergies that we can then add to the DCF to come up with a DCF including synergies. Okay, so loads and loads of work goes in to enabling us to do what we're going to do now, which is produce the football field.

Any questions at this stage? I see someone's just joined, which is great. I'm just putting the link to the files in the chat.

While you're thinking if you've got questions, I just want to show you that this case that I'm using, we actually have a playlist on it.

So if you're interested in doing the valuation work, you can.

So if you go to Topics and you go to Industry-specific and you go to Consumer. So Topics, Industry-specific, Consumer. If you click in there, you'll see we've got the Red Bull case study and we've got the accounting, the modeling, and then all the valuation work, DCF, trading comps, transaction comps, et cetera.

Okay, so nice afterwards if you want to go work through that.

Okay. If there are no questions, let us move on to actually using our valuation tabs to complete the valuation summary.

Okay, and you do have the full file if this is maybe a little fast.

Okay? You can follow in the full file. Right. So first things first.

What are we working in? We're working in millions of euro. Okay.

Secondly of all, Red Bull is a private company, so we're going to be valuing them, putting the enterprise value on the football field. Right? Going over the bridge can happen later, but we'll be having a discussion based on what the enterprise is worth.

So strictly speaking, we don't actually need these two lines at the top. Okay? It's useful to have maybe if I do want to quickly calculate the equity value, but for what we're actually going to be doing today, we don't need them, but useful to have in one place if I quickly want to go over the bridge. So let's just go pull those numbers.

We're going to get them from the Red Bull model, right? So I want the latest historic debt and cash and financial assets. Those are the bridge items.

So to find the latest info that we have, we go to the model and we go to the balance sheet in the model.

And in that balance sheet, we would need to navigate, not in the balance sheet, in the model, we need to navigate to the balance sheet.

And in the balance sheet, we can see we do have, I can't remember which is first, the debt first.

So we're going to go to the first historic year.

And you can see the dates in this model.

Historic is December 2023. Ideally, you want the debt and cash, the bridge items on the day you're doing the valuation, right? But we've got latest historics being December 23. Okay, so imagine we doing, I mean, I know it's 2026, but imagine we doing this valuation in 2024, right? So we're now sitting in almost July 2024, and we're doing the valuation most recent historic debt and cash.

So let's go pull the revolver and the long-term debt balance, and that then gives us the debt for Red Bull.

And then let's go get the cash and the financial assets because we're going to need those if we want to go over the bridge.

So back to the model, and then we are going to get the cash balance from that same year, and then we're going to add financial assets because remember, that sits outside enterprise value. So we now have those items, and this talks to the point on the slide, just in case anybody missed it.

It's this one here that I'm talking about.

Okay, just to have that data there if you want to cross the bridge.

In our case, we're doing enterprise value, so we're not actually going to be using it, but useful to have.

Okay.

Let's then go get the revenue numbers and the EBITDA numbers from the Red Bull model.

So we want last 12 months or actual, so the latest historic stuff, and then we want CY1, which is the upcoming calendar year one, and CY2. So remember, most recent historic year is 2023, so upcoming is 2024 and then 2025. So we're going to go get the revenue from the income statement in the Red Bull model. And just be careful, we do show different countries, so different regions rather, of revenue. So Europe, US, et cetera.

Make sure you're picking the total revenue line in row 54. And so the LTM or historic revenue is that 10,554, and then we're going to just be dragging that to the right to get the CY1, which is December 24, and CY2, December 25.

Okay.

Then we need to go get the EBITDA. We've got that on the income statement as well, so we're going back to the same place, and we're picking the same column.

Right. So we are going to row 60. We're getting the 2023 actual EBITDA number.

And then if we copy that to the right, we would have populated our forward years as well.

Okay. I'm getting hotter and hotter. I think I'm going to be melted by the end.

Okay.

Right. Let us then start doing our football field. So we've got the main data we need.

Okay, now we're going to go get the comps and populate the football field. Any questions, please don't be shy to ask.

I just want us to scroll down a bit so that we know where we're going, and we'll see that this starts updating as we working.

So if you go down to row 43, we've already set up here the results of what we're going to be doing now. Right? So I've already just pre-populated this just to make it a bit faster in the session. So we'll have a look at the end, but this is just linking to the rows above. And then we've inserted this difference column, and the difference is literally just the difference between the min and max, and that's what's going to be populating our chart.

So we use the min, the difference, and the different valuation techniques. So the chart is already there, and like I said, it's highly likely that you'll already have a template to use.

Okay, and also these days with Copilot and other AI tools, creating and playing around with charts is a lot easier than it used to be. Okay, so let's start going and getting the data that we need to do the football field, and we're going to do the standalone valuation first, right? So we're using a number of metrics. We've got EV to revenue and EV to EBITDA. Now, what you use depends on the situation. I mean, you can see we've chosen to use EV to forward revenue for year two So you might think, well, why use that instead of LTM or instead of CY1? First of all, with valuation, it's forward-looking. So we would use forward multiples where we can.

LTM we use for debt analysis. LTM we also use for LBO analysis. But generally, for valuation, we want forward multiples.

Now, we could have used CY1 here, but this is the kind of judgment calls you need to make and think what's useful.

I mean, CY1 at the time we're doing this valuation, we're sitting, say, in July. It's already halfway through the year anyway, so you could put CY1 or just CY2, which is the next upcoming year.

Another thing to think about is maybe there's some distortion in the CY1 numbers, and you don't want to use them for some reason.

So say, for example, there is super high inflation, and it's only expected to moderate the year after. I know that those CY1 earnings numbers are going to be distorted by that unusual inflation, and so I don't want to base my valuation on something that's a bit distorted.

So then I'd rather say, "Well, let's use CY2." Okay, so this is a judgment call based on the situation.

So we've decided to use EV to CY2 revenue.

So we're going to get the min and the max from the shortlist.

So this is a simple equals min function.

We then got to navigate to the trading comps tab.

So equals min, and then we're going to Control Page Up to get us to that main, not the trading comps scratch, the one that's just called trading comps before the checklist.

And then we want to navigate down to our shortlist and just make sure we're picking up the correct columns.

We want EV to revenue for CY2, which is 2025.

So I'm in column AG. I just want to F4 to lock, because we're going to want to copy this to the right.

And so I'm going to get the lower of those two multiples.

And then if we just copy that to the right, I want to just change the min to a max, and then it'll pull the higher of the two multiples.

Like I said at the beginning, you're not going to have always just two multiples only. It depends on the company.

It depends on how similar it is. But in our case, we do only have two.

Then what we want to do is we want to say, okay, well, what is the implied enterprise value? So make sure that we're going to go pick up the CY2 revenue. Don't mix your value driver with the multiple. I can't go pick LTM revenue or CY1 revenue. Doesn't make sense.

This is a CY2 multiple. So I go pick CY2 revenue, lock onto that, because I'm going to copy to the right and multiply with the revenue multiple. And then we copy to the right, and we have our min and max range.

Now, something that's in the solution file that I want to show you, I should have maybe just left them in here, but it showed N/A. So while I was preparing it, I just deleted the N/A.

You don't have to go to the solution file, but in the solution file you'll see that we've got these formulae in row 15 that might look a bit scary if you're not familiar with Excel. The purpose of these formulae in row 15 is to facilitate your discussion.

It is very useful for you to know before you go into that meeting, when you're looking at your football field, which company is the min, which company is the max.

Because that makes your discussion more valuable.

If you're saying to a client, "Oh, look, we see on the low end of the range is Coca-Cola. On the high end of the range is Monster," instead of just numbers that don't really mean much.

So what this is, instead of typing in the name, we want to make it dynamic. Because in reality, your multiples are going to change every single day.

As these stocks trade and their equity value changes, their enterprise value changes, and especially if you've got a longer comps list, the min and the max could become different companies.

So we want this to be a flexible formula where all it's doing, and I don't want to turn this into an Excel session.

If we've got a few minutes at the end, I can maybe show you.

This is the kind of stuff that Copilot is really good at, asking it to just write you a formula to do something.

So if we've got a few minutes at the end, we can come back and look at this.

But all this is saying is basically go to the trading comp sheet, go find that multiple, and then go match it to the two names that I've got. So this is just doing a matching function. But that is useful to have to facilitate discussion, like I said, especially if you've got a longer comps list.

So I'm just going to go back to the empty version.

And let's carry on with our trading comps.

We now want to look on an EV/EBITDA basis.

So we're going to do exactly the same thing. Equals min.

We're going to go to the trading comps tab, but instead of pulling from column AG, which is the revenue multiples, I'm going to go to column AK, which is the EV/EBITDA multiples.

And I'm going to select the two comps.

I'm going to F4 to lock the value, and then I'm going to multiply. Well, no, I don't need to multiply, actually. I just need to press Enter, because we're doing the comps in two steps.

So I've got the multiple on its own, and then I copy to the right, and then I will just change the min to a max.

So we've got our low and our high, and then just like we did with revenue, go pick the CY2 EBITDA. This is a CY2 multiple. So up at the top we have got CY2.

I'm just going to lock Multiplied by the multiple and copy that to the right.

My Excel is scaring me a bit today. I don't know what is going on, but it is taking ages when I pre-save, and I don't have super big workbooks.

Oh, I think I might know what it is.

I actually want to do something quickly.

If I go to formulas and calculation options-- Oh, it is on partial. Okay.

I thought it was doing the data tables every time.

Anyway, we'll hopefully make it to the end of the session. Okay.

If we scroll down quickly and have a look, can you see what's happening in the bottom part? It's starting to populate.

So all we've done is we've just linked up to these numbers.

So we've linked to the min and the max value for each technique.

And you can see we've got the difference column.

Okay. Calculated as the difference, and then that is slowly starting to populate our chart. Okay. We'll talk about the chart at the end.

Any questions before we move on to the DCF valuation? I see someone has joined. Welcome.

Link in the chat to the files.

If there are no questions for now, let's do the DCF. I don't want to get caught up in the fancy formulae here. You're welcome.

I don't want to get caught up in the fancy formulae at the top, but that is doing the same thing. We want dynamic formulae to go be able to pick up the WACC and the growth that has gone into this DCF valuation.

So I'm not going to go through the detailed Excel of that. You've got the formula.

And you've also got a recording in that playlist, that consumer playlist that I showed you.

So let's just go pull the min and the max from that DCF valuation range. So equals min. If we go to the DCF, we said we're going to go to the sensitivity table.

Now, you can do a sensitivity table as big as you want.

But when I'm putting stuff on a football field, I've got to think about, okay, what do we think is reasonable? I don't want to show the client a range of long-term growth from 1% to 5% and WACC from 7% to 12%.

I'm going to get a massive range. So yes, for my purposes, I might do a slightly bigger sensitivity table, but you've got to anchor it around what you think the most reasonable values are for long-term growth and WACC.

So here, I'm not going to be pulling the min from the whole table.

I'm just going to be pulling the min from that gray shaded area in the middle, just to have a narrower range.

So if I go select all of that, I'm going to press F4 to lock it.

And that will give me the lower of the two-- Not the two, the valuations, and then if I copy that to the right, I'm just going to change it to a max function.

So that's been changed to the max.

So we've got our low and our high.

So we are now done. Remember we said earlier on the slides, you want to group your standalone valuation techniques together.

So there's our first three standalone techniques.

We're now moving on to say, "Okay, let's look at a control situation." So if there were a strategic buyer, M&A, what would this look like? Let's go do DCF with synergy. So we have got a separate page where we've got synergies. We did a bit of work looking at previous transactions and looking at what percentage of revenue were the synergies for the transactions that disclosed synergies.

So we've got a number here of 8.2%. I'm just going to lock onto that. So that is useful for me to know what kind of synergy percentage we are looking at.

And then we are going to go actually get the synergies.

So the present value of those synergies from the synergy tab, we have got all the way at the bottom in row 26.

So doing a discounted cash flow for those synergies, because remember, we've already got the standalone DCF that includes no synergies.

So then we did a DCF just looking at the present value of the synergies. I'm going to lock onto that.

And what we can now say is, okay, well, our min DCF without synergies was around $75 billion.

Let's add the present value of the synergies, and now we have a min DCF including synergies, and then we copy that to the right to get the max.

Also control situation, let's look at transaction multiples. We're going to get a min and a max.

And remember we said we've already narrowed down that list.

So I'm going to equals min, go to the transaction comps tab, and I'm going to go to the shortlist of the transaction comps.

I'm going to go pick the EV/EBITDA multiples.

So column L, F4 to lock.

That'll give me the lowest multiple at 15.9 times.

Copy to the right. It's looking the same because we have got still a min in there. I want to change that to a max.

Okay.

And then implied enterprise value. Let's be careful here.

Accuracy is important.

This is an LTM EBITDA multiple. It's not a forward multiple.

Because when we go and pull these transactions, very often, especially if it's a private company, they don't disclose forward earnings. And so we've got LTM earnings usually, and so that's why we've got this LTM multiple.

So just make sure we're going up to Red Bull's data, and we're going to be picking their LTM EBITDA. So LTM EBITDA times the multiple, and I just want to lock onto that EBITDA so I can copy it to the right.

And there we have our min and our max transaction comp values.

The last one we're going to put on the chart, and remember, you're not going to put every single technique on the chart if that's not part of the discussion you're having with a client.

Here, we are considering all options.

So we're going to show the LBO, and then we'll discuss why it looks like it looks and what that means. Okay? So for the LBO, we've done an LBO analysis on, if you have to now scroll to the right, the red LBO tab.

We've done one valuation, right, assuming an entry and an exit multiple of a certain amount with certain assumptions. Right? We don't just want to put one value on here.

Furthermore, what we want to show is what would a private equity buyer be willing to pay for this target? And we know traditionally, PE, they want around twenty to twenty-five percent. Okay, obviously, those numbers would be updated depending on market conditions. But what we've then done is if you look at the bottom here, we have got the sensitivity analysis. So we're looking at one exit year in our football field. So we're assuming an exit year of year four.

And then what we are doing is we are saying, "Okay, I don't want to go just show some random multiples." I want to say, if the PE buyer wanted to achieve an IRR of at least twenty percent, do you agree that means, so a twenty percent IRR, okay, a bit more, they would only be willing to pay a multiple of sixteen point three times, right? So that's what we've done on this valuation summary tab.

So that twenty percent, there's another fancy formula here.

But again, this is something Copilot can do quite neatly.

We're saying, "Go and find twenty percent in the body of the table, and then go look and tell me what multiple that translates to." Okay? And then we've done it for twenty-two percent as well. Always important to do a sense check, reasonability check. Guys, do you agree if you want to earn a higher IRR, you're going to be willing to pay less.

Right? Lower entry multiple versus a lower IRR, then you pay a higher multiple. Okay? So we've done a sense check, formula work.

So that's important, right, if you're using AI to do your formulas.

Obviously, you've got to stress them a little bit, check, and also obviously do a reasonability check. Okay, let's come up with the implied enterprise value.

Implied enterprise value, this is an LTM multiple.

Okay, so let's go get Red Bull's LTM EBITDA and multiply it.

I'm going to lock and then multiply, copy to the right, and there we have our min and max.

Now everything is populated. The football field is populated. We've chosen, even though in our sheet we're working in millions of euro, to just cut down the number of zeros, we formatted it to display as billions.

We've grouped together the standalone values at the top. So these first three, that would be a standalone value.

And then we have got the control situations at the bottom. What we then need to think about is saying, "Okay, where do these overlap, and does anything kind of stand out that we need to be able to really talk about?" So if I look standalone, we've put the two dotted lines here that just shows, okay, if you were to list this business post-IPO, it should trade at around, what is that? Seventy-eight to eighty billion. Okay.

Because you can see that is where the different techniques overlap.

You might say, "Okay, but look at this EV to EBITDA, that's actually a bit lower." But then we would say yes, but that is Coca-Cola. Coca-Cola is a more mature company than Red Bull. Yes, it's got a brilliant brand and everything else.

But metrics-wise, Red Bull is closer to Monster. And so, yes, we are comfortable with pricing at the top end of the trading comps range.

Okay? So that would be a standalone valuation If we just look at a control situation, these numbers look, I want to say wrong, but the client would want you to discuss them potentially. So it's not necessarily to say, well, you're just going to leave them off the football field completely, but you need to be able to defend them and talk about them. So here we've got the DCF with synergies, but then the transaction comps, they're valuing the business at lower than the standalone valuation, and that doesn't quite make sense, right? Because for control situations, there's a control premium.

And so the reason that is happening is if you go look at the transaction comps, some of them, or most of them, are a little bit old, and multiples have expanded recently. So looking at multiples from three years ago versus multiples now, it's not a like-for-like comparison. Furthermore, you've got to look at those companies that were being bought, and Red Bull is a strong company, strong brand, good financials. And so actually we would say yes, those are the transaction comps, but we think you would get higher.

So we would be placing a bit more reliance on what we've seen from the DCF with the synergies.

And so you would say around $90 to $100 billion potentially for a control situation.

The LBO, that looks low. We're not going to go say to the client, "Your business is only worth 40-something billion." What? We just said that you're worth about $80 billion.

How does that work? So the discussion here is to say, look, if you did do a sale of the business in a control situation, if private equity were to bid to earn the IRR that they would want to earn, their bids would not be acceptable. So they are not strong contenders as bidders for this business. If you want to sell controlling stake, you would be looking towards strategic buyers where there would be synergies, et cetera. Because on a LBO basis, the valuation would be very low. So in the absence of that discussion, this looks a little bit like, okay, what are we doing here? But that's why it's important in your labels to have like what we've done, the 20, the 22, et cetera.

Are there any questions before we wrap up? Still got a bit of time, and I always squeeze the last minutes out that I can get because what I would like to show you-- If you've got questions, please keep typing. But I just want to show you, I said it's quite unlikely that you're going to build this chart from absolute scratch.

But just if you are interested, if you click on that purple bit, if you just click on one of the purple bars in the chart, that is pulling the difference.

And then if you just click somewhere else, if you click, you can't see it because it's been formatted as white, but it's a stacked bar chart where it is pulling the minimum. So it's taking the minimum and then stacking the difference on top of that minimum.

So just to show you, like I said, unlikely you're going to have to do this from scratch. But just if you're curious, my computer earlier was not cooperating very well. I know I don't want to be someone who blames the machinery when they can't do something, but it was being super glitchy. So let's see. I don't do these charts very often, but just to show you, let's hope this works this time.

We have got the different labels. We've got the min, we've got the difference that we've selected.

Then what we're going to do is we're going to say insert, and you're going to go to charts, and you want the bars.

So I'm there underneath where view is.

I want those bars, and then I want the 2D sideways bars, and I want the middle one.

I want a stacked bar.

So 2D stacked bar chart. And you can see it's produced something that looks pretty close to what we've got.

I just want to move this down so I don't get confused with the previous chart.

And then what you would do is, I'm not going to spend time playing around and making it look pretty, but the blue bars are the ones we don't want to see.

So if you click into those bars, you can then format those bars. If you click on that format, there's lots of ways of accessing the menu or the ribbon.

But the color, I don't know. I prefer actually to just right click. There we go.

That's the easiest for me. Right click and then fill.

And I don't want any fill on those bars.

All I want to show is that difference.

And then we need to clean it up. I don't want these vertical lines, so I want to delete those vertical lines. The other thing, and this is where it got a bit glitchy, and guys, I'm not going to pretend I do this all the time.

But let's see if I can make it work this time is can you see? I don't like how it's got the LBO on top and it's got the trading comps on the bottom. So I want to flip this.

So if I click there, I'm just clicking on the axis and right click.

I want to format the axis, so right click and format axis, and then it opens this box on the right-hand side.

So I right clicked format axis, opens this box.

And then this category's in reverse order near the bottom.

If I tick that, you can see it's flipped the order of the categories.

So that category's in reverse order. For me, it was unticked.

Now I ticked it and it's flipped. That's what I want.

But now I've got another problem that wasn't there before.

They've put the x-axis at the top and I want it at the bottom. So to change that, it's here.

Horizontal axis crosses there. I want to click at the maximum category. And if you click there, it's then taken that to the bottom. Okay.

And then I don't want to spend time now, but here you can then play around with the formatting, insert the title, delete the series names, and this is the kind of stuff with Copilot, if you prompt it properly.

Okay, although last night it was struggling a little bit when I was trying to get it to do certain things. But if you even upload a picture of something that you wanted to copy, okay, it's pretty good with doing stuff like that.

So I'm not going to spend too much time on this for now.

So that's the one thing I wanted to show you.

And then the other thing I just wanted to show you is here where we said, oh, this min and the labels, right? So remember on the solution file, I said we've got some fancy formulae in here where we want Excel to go and find the company that matches this multiple. So what we could do, and let's hope it works, I feel like always a little bit scared demonstrating AI stuff live.

But let's see. If I just open Copilot, I think I'm going to have to turn on auto-save, okay? And the prompt that seemed to work for me, and guys, you obviously got to play around, right, with the prompt that you want.

But I'm trying to explain what I would like it to do.

So I'm going to say, write a formula, and I should be nice, right? I know it's a machine, but let's say, please, you're talking to a junior, you're talking to someone who's helping you. Please write a formula, okay? Obviously, you don't need to do that.

Please write a formula in-- so which cells do I want it to do it in? I want it to do it in C15. I want it to do it in D15. So C15, D15. And then I also want it to do it for the EV/EBITDA multiple.

So then that would be C20.

So C20 and D20. Okay. Well, and let's not type in 10. So please write a formula in C15, D15, C20, and D20. And then I didn't put too much thought into this, but this was my way of saying it, okay, where the name of the company-- where the name of the company, or let's say, let's actually be more specific.

Where the name of the relevant company.

And now be specific. In the short list on the trading comps tab. So you've got to tell it where to go look. So it's so clever, I don't even need to tell it which rows. I just say go to the short list on the trading comps tab.

And I want the name to appear, okay, so where the name of the relevant company in the shortlist on the trading comps tab appears by matching it to the multiple in row 16.

Because that's the multiple here, right? Row 16, go find that multiple.

And then the other one that I wanted to look at is row 21.

So go find that multiple there.

Okay, so let's see.

So I think that makes sense. Let's just double check.

Write a formula in those cells where the name of the relevant company in the shortlist on the trading comps tab appears by matching it to the multiple in row 16 and 21. Let's see what it does.

Hopefully, it doesn't take too long.

We've got a few minutes left, but I think it can do it.

In the meantime, if you've got any questions, please do ask while it does its thing.

Oops, sorry.

Okay. It's working pretty quickly.

I think it should almost be done, and then we will wrap up.

It is taking a little bit longer than earlier. Oh, there we go.

Okay, so it's done. It looks like it's still kind of working.

But it's written its match function, it's done everything.

And obviously, I don't want to just take this at face value. I would now go and do a little bit of stress testing around this, right? So what I would do is I would say, okay, what happens if, for example, instead of putting min in here, what if I made this the max? Do we agree that then the company that should appear should be Monster? Oh, yes, Monster does appear.

Okay, this seems to be working. So we would need to play around, check the formula. What you might notice is here an index function has been used instead of how we did it.

Let me just press done. Instead of on our answer, we used an offset function. So an offset function basically does the same thing, but an index function just does it differently, okay? And an index function goes and looks at a range and goes and finds the answer.

So what you could actually then do, I asked, "Why did you use index instead of offset?" And it explained to me that it's actually better because it's a bit more flexible if you're inserting rows into the range.

And so ask it why it's done what it's done and play around, do some testing on it to see that it actually works as intended.

So guys, that's it from my side. I just want to wrap up by just reminding you, because I know some of you joined late.

The recording will be posted under the Felix Live section.

Then this case that we've been looking at, if you want to go do the valuation work, we've got it. So it's under topics, it's under industry specific, it's under consumer, right? Topics, industry specific, consumer.

And then finally, to go through the valuations stuff more technically, if you go to investment banking and you navigate to valuation, we've got the football field. So pulling the analysis together, that's basically what we were doing.

It's just another set of data for different companies.

But then if you do want to build that model from scratch and go and have a look at inserting the lines and formatting it nicely. If you click in there, you'll see there's four videos, and it takes you through doing the basic graph, inserting a share price line if it's a public company, and then putting floating labels.

So if you do want to do it manually, you've got it there.

But like I said, I would leverage AI as much as you can for these kind of more manual tasks. So guys, I am going to leave it there. Say thank you very much for participating today.

I hope you have a lovely rest of your day, wonderful weekend, and if you are in a place that is super hot like London, I hope you remain cool today, and I think we've got cooler weather coming. So guys, thanks very much.

Hope to see you on a future session.

I'll stick around now for a couple of minutes if anyone does have any questions.