Financial Advisory and Investment Banking Services from Duff & Phelps. Goodwill Impairment Around the World||Duff & Phelps recently published a series of 2013 Goodwill Impairment Studies covering the European, U.S. and Canadian markets. This new report provides an overview of some key observations and findings across the three studies. ||Read the full report|| Valuation by a Monday Morning Quarterback|| The topic of hindsight in retrospective valuations is a recurring issue in court cases. ||Read the full article|| Valuing Illiquid and 'Hard to Value' Assets|| ||Read the full article || Terminal Values. It is quite possible that free cash flows will be generated well beyond our forecast period.
Therefore, many valuations will add a terminal value to the valuation forecast. The terminal value represents the total present value that we will receive after the forecast period. Example 12 - Adding Terminal Value to Valuation Forecast Net Present Value for forecast period (Example 9) $ 423,500 Terminal Value for beyond forecast period 183,600 Total NPV of Target Company $ 607,100 There are several approaches to calculating the terminal value: Dividend Growth: Simply take the free cash flow in the final year of the forecast, add a nominal growth rate to this flow and discount the free cash flow as a perpetuity. Terminal Value = FCF ( t + 1 ) / wacc - g ( t + 1 ) refers to the first year beyond the forecast period wacc: weighted average cost of capital g: growth rate, usually a very nominal rate similar to the overall economy Example 13 - Calculate Terminal Value Using Dividend Growth Year FCF.
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