Kohler Case Study
Kohler Case Study
Kohler Case Study
Methodology
1. 2. 3. 4. Case summary Valuation: Income approach (DCF) Valuation: Market approach (Multiples) Discount for lack of control and marketability 5. Valuation summary (intrinsic value per share)
2. Income approach
Apply the corporate value model Find the market value (MV) of the firm (assets), by finding the PV of the firms future Free Cash Flows (FCFs). Dont forget the terminal value (use constant growth model) Subtract MV of firms total liabilities to get MV of common stock. Divide MV of common stock by the number of shares outstanding to get intrinsic stock price (value). You can use any correct measure of FCFs (one measure is discussed in the notes posted on the web ( Financial Statements) Free Cash Flow to the firm: EBITx(1-T) + Depreciation - Change in Operating Working Capital Capital expenditures Free Cash Flow to the firm (this case): (Operating income after depr.)x(1T) + Depreciation and amortization (tangible and intangible) - Change in Operating Working Capital Purchase of Property, Plant and Equipment