The form’s results include a visual depiction of a “value bridge”, and every value driver quantified in the form of absolute ($) value creation, relative (%) value creation, equity return multiples or multipliers, and value creation IRRs.Wolfram Mathematica is an computational development application and platform that offers a large range of mathematical capabilities and algorithms, heavy number crunching, specialized technical functionality, and data acquisition, processing, analysis, and visualization.
The form requires only those inputs needed to complete the analysis. In the form below, users may select either the Conventional, Derivative, or Logarithmic model of value creation, and other analysis parameters of their choosing. With the completion of Private Equity Value Creation Analysis, we created a new calculator that can perform most of the math in the book. Error checking – comparing the results of the calculators with those in the analyst’s spreadsheets to help identify formula errors.Stress testing – changing certain value creation input variables by x% to ensure that the value creation results continue to make sense.Preliminary investigations – sampling a few companies to determine the most appropriate methods or techniques for a portfolio.Several of these calculators are available here. They also accounted for the impacts of holding period events like follow-on equity and debt investments, add-on acquisitions, dividend recapitalizations, and divestments. The calculators extended the Conventional Model to include changing ownership percentages, company revenue, EBITDA margins, and gross profit margins. These were all based on the Conventional Model of value creation, which is described in the prior articles and Chapter 4 of the book.
In early 2020, we built several value creation analysis calculators onto the site. Introduction to a series of online private equity value creation calculators that should help analysts stress test and error-check their analyses.
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