In transaction comps, the multiple we are going to use is our EV (or enterprise value) to last 12 months EBITDA Now that is the last 12 months up to the transaction This is a really important point, it's very difficult for us to take the calendarized year 1 or calendarized year 2 figures for after the deal Imagine the deal was five years ago I might have access to the last 12 months EBITDA up to the deal But I'm very unlikely to have access to the forward figures five years ago (going on year forward and two years forward) now Second of all because many of these companies are private, getting access to any of their data is extremely difficult So last 12 months, much more likely to have access to them than forward figures We now need to choose our deals and for this we're going to go to our transaction comparable tab And here we've got a list of some deals With the benefit of hindsight, we can actually see the deal of Samsonite buying Tumi (but we'll ignore that one) What we'll do, is we'll go along to the description of the deal and this is the most important thing This is a judgement, this is not a mathematical decision. We need to choose which deals feel the most comparable So we'll have a look at our first deal here and this looks at offering such a sun glasses and sun lens segment Tumi looks at high end luggage, so I'm not sure this is a perfect comp If we look at Loro Piano, we can see that they're involved in apparell The next one down, again, manufactures and markets apparel The next one, owned brands including Calvin Klein, Tommy Hilfiger So these are at least the designer brands that Tumi represent. In short it's very difficult for us to find good deals That compare well with the target we're looking at There are one or two things that can help us to maybe reduce down the list Firstly we can look at some multiples, so EV last 12 months, EBI And we can see that for one of them here, they have a single digit multiple of 8.0 If it's single digit, particular in a branded product industry such as this one Then the chances are that this is looking at a private equity or LBO deal Why is this? Because they're going to be using large amounts of debt But the large amount of debt they'll be using is probably only 6 times EBITDA So if your debt is 6 times EBITDA, that represents maybe 70% of your funding Then the remaining 30% can only be equity. That's never going to get you up to a multiple of 15, 20, 25 times EBITDA So we can probably exclude that one from our list unless of course we were working for a private equity client So again, difficult to choose ours. I'm going to choose the 10 and the 15. These two deals involve the Warnaco group and Marcolin If we went with the other deals, then we might end up with a range which was just too wide So at the moment we've got a range from 10 to 15.7, already a very wide range But we could go as far as 8 up to 21, which is just far too wide. That's not going to be helping my client at all So we put the 10 and the 15, but we must include the names of the companies that are being targetted Remember this is judgment and we want to show how these companies were relevant to our company And how they're going to help us understand our deal So let's take those figures to our football field, we're going to include the Warnoco group and Marcolin The figures that we had there, it was ten times for Warnaco and 15.7 I then want to multiply that by the last 12 months EBITDA for Tumi I know I've got that on the Tumi 1 tab That then gives me an implied acquisition EV Multiple times by EBITDA And now we need to go over the EV equity bridge I can steal these labels from a little bit further up the page from where we saw them earlier So I now take my EV, add the financial assets, subtract off my financial liabilities. Copy that same formula right My share price is thus my equity value, I'm now going to divide that through by my shares Giving me a range of 19.04 to 29.12. Again quite a wide range there Other things that could have helped me choose my comparable deal, maybe could be the size of the company So maybe the size of their sales, I can see that Warnaco group and Marcolin have sales around about the 2.4 billion and the 200 million We can see that Tumi has sales of 550.5 We might also want to look for similar margins I can see that Tumi's margins are marge higher than the two that we've chosen and any other profit drivers