STRICTLY PRIVATE AND CONFIDENTIAL

Methods of Valuation
27 Elul Wed
Index

Valuation Summary

Summary Multiple Value

Justified Multiple 19.5x
Qualitative Multiple #DIV/0!
Private Transactions
Comparable & Historical Valuation
Average #DIV/0!
Index

Qualitative Multiple

① MUNGER EFFECT ---> CURRENT QUALITY OF THE BUSINESS

② DORSEY EFFECT ---> MOAT OF THE BUSINESS.
③ LYNCH EFFECT --> FUTURE GROWTH OF THE BUSINESS
④ BERKSHIRE EFFECT ---> ALIGMENT OF INTERESTS
⑤ SINGLETON EFFECT ---> CAPITAL ALLOCATION HISTORY
⑥ BEZOS EFFECT ---> MANAGEMENT APTITUDE (Culture, long-term orientation, etc…)
⑦ TALEB EFFECT ---> Antifragility
⑧ GOOGLE EFFECT ---> Operational and Disruption Risk (Product diversification, regional diversification, recurrence of rev
⑨ PABRAI EFFECT ---> Assymetry of risk and return
⑩ AMANCIO ORTEGA EFFECT ---> Balance Sheet strength
Weighted average
 Nota Multiple
0.0 9.0x
1.0 10.0x
2.0 11.0x
3.0 12.0x
4.0 13.0x
5.0 14.0x
6.0 15.0x
7.0 16.0x
8.0 17.0x
9.0 18.0x
#DIV/0! 10.0 19.0x

Reverse to the mean

RoundUp #DIV/0! #DIV/0!
RoundDown #DIV/0! #DIV/0!
Average #DIV/0!
Index

Justified Multiple

Year 1 2 3
EBIT 100.0 110.0 121.0
(-) Taxes (25.0) (27.5) (30.3)
(=) NOPAT 75.0 82.5 90.8
(+) Depreciation
(-) CAPEX
(-) ∆ Working Capital
FCF Pre Growth Inv 75.0 82.5 90.8
(=) Net Investment (37.5) (41.3) (45.4)
(=) FCFF 37.5 41.3 45.4

Projected Cash Flow 37.5 41.3 45.4

Terminal Value 0 0 0

Discounted Projected Cash Flow 34.4 34.7 35.0

Discounted Terminal Value 0.0 0.0 0.0
EV 1,462.04

Assumptions Growth Stage

Tax Rate 25.0%
ROIC 20.0%
WACC 9.0%
Reinvestment Rate 50.0%
Years 15
Growth % 10.0%
Assumptions TV
Tax Rate 25.0%
ROIC 10.0%
WACC 9.0%
Reinvestment Rate 20.0%
Growth % 2.0%

EV/FCF Multiple 19.5x

Sensitivity Growth Stage

ROIC 20.0%
Years 15

19.5x -5.0% -3.0% -1.0%

1
2
3
 4
5
6
Year 7
8
9
10
11
12
13
14
15

19.5x -5.0% -3.0% -1.0%

2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
ROIC 14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0%
30.0%

0.5x -5.0% -3.0% -1.0%

2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
ROIC 14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
28.0%
30.0%
 4 5 6 7 8 9 10 11
133.1 146.4 161.1 177.2 194.9 214.4 235.8 259.4
(33.3) (36.6) (40.3) (44.3) (48.7) (53.6) (58.9) (64.8)
99.8 109.8 120.8 132.9 146.2 160.8 176.8 194.5

99.8 109.8 120.8 132.9 146.2 160.8 176.8 194.5

(49.9) (54.9) (60.4) (66.4) (73.1) (80.4) (88.4) (97.3)
49.9 54.9 60.4 66.4 73.1 80.4 88.4 97.3

49.9 54.9 60.4 66.4 73.1 80.4 88.4 97.3

0 0 0 0 0 0 0 0

35.4 35.7 36.0 36.3 36.7 37.0 37.4 37.7

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

g
1.0% 3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0%
 g
1.0% 3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0%

g
1.0% 3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0%
 12 13 14 15 16 17 18 19
285.3 313.8 345.2 379.7 387.3 395.1 403.0 411.1
(71.3) (78.5) (86.3) (94.9) (96.8) (98.8) (100.7) (102.8)
214.0 235.4 258.9 284.8 290.5 296.3 302.2 308.3

214.0 235.4 258.9 284.8 290.5 296.3 302.2 308.3

(107.0) (117.7) (129.5) (142.4) (58.1) (59.3) (60.4) (61.7)
107.0 117.7 129.5 142.4 232.4 237.1 241.8 246.6

107.0 117.7 129.5 142.4 0.0 0.0 0.0 0.0

0 0 0 0 3320 0 0 0

38.0 38.4 38.7 39.1 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 911.5 0.0 0.0 0.0

17.0% 19.0% 21.0% 23.0% 25.0%

17.0% 19.0% 21.0% 23.0% 25.0%

17.0% 19.0% 21.0% 23.0% 25.0%

 20 21 22 23 24 25 26 27
419.3 427.7 436.2 444.9 453.8 462.9 472.2 481.6
(104.8) (106.9) (109.1) (111.2) (113.5) (115.7) (118.0) (120.4)
314.5 320.7 327.2 333.7 340.4 347.2 354.1 361.2

314.5 320.7 327.2 333.7 340.4 347.2 354.1 361.2

(62.9) (64.1) (65.4) (66.7) (68.1) (69.4) (70.8) (72.2)
251.6 256.6 261.7 267.0 272.3 277.7 283.3 289.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0 0 0 0 0 0 0 0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
 28 29 30 31 32 33 34 35
491.2 501.1 511.1 521.3 531.7 542.4 553.2 564.3
(122.8) (125.3) (127.8) (130.3) (132.9) (135.6) (138.3) (141.1)
368.4 375.8 383.3 391.0 398.8 406.8 414.9 423.2

368.4 375.8 383.3 391.0 398.8 406.8 414.9 423.2

(73.7) (75.2) (76.7) (78.2) (79.8) (81.4) (83.0) (84.6)
294.7 300.6 306.7 312.8 319.0 325.4 331.9 338.6

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0 0 0 0 0 0 0 0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
 36 37 38 39 40 41 42 43
575.6 587.1 598.8 610.8 623.0 635.5 648.2 661.2
(143.9) (146.8) (149.7) (152.7) (155.8) (158.9) (162.0) (165.3)
431.7 440.3 449.1 458.1 467.3 476.6 486.1 495.9

431.7 440.3 449.1 458.1 467.3 476.6 486.1 495.9

(86.3) (88.1) (89.8) (91.6) (93.5) (95.3) (97.2) (99.2)
345.3 352.3 359.3 366.5 373.8 381.3 388.9 396.7

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0 0 0 0 0 0 0 0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
 44 45 46 47 48 49 50
674.4 687.9 701.6 715.7 730.0 744.6 759.5
(168.6) (172.0) (175.4) (178.9) (182.5) (186.1) (189.9)
505.8 515.9 526.2 536.7 547.5 558.4 569.6

505.8 515.9 526.2 536.7 547.5 558.4 569.6

(101.2) (103.2) (105.2) (107.3) (109.5) (111.7) (113.9)
404.6 412.7 421.0 429.4 438.0 446.7 455.7

0.0 0.0 0.0 0.0 0.0 0.0 0.0

0 0 0 0 0 0 0

0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0
Index

Justified Multiple

Assumptions Growth Stage

Tax Rate 25.0%
ROIC 20.0%
WACC 9.0%
Reinvestment Rate 50.0%
Years 15
Growth % 10.0%
Assumptions TV
Tax Rate 25.0%
ROIC 10.0%
WACC 9.0%
Reinvestment Rate 20.0%
Growth % 2.0%

EV/FCF Justified Multiple 19.5x

Year 1 Year 2 Year 3 Year

EBIT 100.0 110.0 121.0
(-) Taxes (25.0) (27.5) (30.3)
(=) NOPAT 75.0 82.5 90.8
(+) Depreciation
(-) CAPEX
(-) ∆ Working Capital
FCF Pre Growth Inv 75.0 82.5 90.8
(=) Net Investment (37.5) (41.3) (45.4)
(=) FCFF 37.5 41.3 45.4

Projected Cash Flow 37.5 41.3 45.4

Terminal Value 0 0 0

Discounted Projected Cash Flow 34.4 34.7 35.0

Discounted Terminal Value 0.0 0.0 0.0
EV 1,462.04
4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year
133.1 146.4 161.1 177.2 194.9 214.4 235.8 259.4
(33.3) (36.6) (40.3) (44.3) (48.7) (53.6) (58.9) (64.8)
99.8 109.8 120.8 132.9 146.2 160.8 176.8 194.5

99.8 109.8 120.8 132.9 146.2 160.8 176.8 194.5

(49.9) (54.9) (60.4) (66.4) (73.1) (80.4) (88.4) (97.3)
49.9 54.9 60.4 66.4 73.1 80.4 88.4 97.3

49.9 54.9 60.4 66.4 73.1 80.4 88.4 97.3

0 0 0 0 0 0 0 0

35.4 35.7 36.0 36.3 36.7 37.0 37.4 37.7

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year
285.3 313.8 345.2 379.7 387.3 395.1 403.0 411.1
(71.3) (78.5) (86.3) (94.9) (96.8) (98.8) (100.7) (102.8)
214.0 235.4 258.9 284.8 290.5 296.3 302.2 308.3

214.0 235.4 258.9 284.8 290.5 296.3 302.2 308.3

(107.0) (117.7) (129.5) (142.4) (58.1) (59.3) (60.4) (61.7)
107.0 117.7 129.5 142.4 232.4 237.1 241.8 246.6

107.0 117.7 129.5 142.4 0.0 0.0 0.0 0.0

0 0 0 0 3320 0 0 0

38.0 38.4 38.7 39.1 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 911.5 0.0 0.0 0.0
20 Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 Year 27 Year
419.3 427.7 436.2 444.9 453.8 462.9 472.2 481.6
(104.8) (106.9) (109.1) (111.2) (113.5) (115.7) (118.0) (120.4)
314.5 320.7 327.2 333.7 340.4 347.2 354.1 361.2

314.5 320.7 327.2 333.7 340.4 347.2 354.1 361.2

(62.9) (64.1) (65.4) (66.7) (68.1) (69.4) (70.8) (72.2)
251.6 256.6 261.7 267.0 272.3 277.7 283.3 289.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0 0 0 0 0 0 0 0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
28 Year 29 Year 30 Year 31 Year 32 Year 33 Year 34 Year 35 Year
491.2 501.1 511.1 521.3 531.7 542.4 553.2 564.3
(122.8) (125.3) (127.8) (130.3) (132.9) (135.6) (138.3) (141.1)
368.4 375.8 383.3 391.0 398.8 406.8 414.9 423.2

368.4 375.8 383.3 391.0 398.8 406.8 414.9 423.2

(73.7) (75.2) (76.7) (78.2) (79.8) (81.4) (83.0) (84.6)
294.7 300.6 306.7 312.8 319.0 325.4 331.9 338.6

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0 0 0 0 0 0 0 0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
36 Year 37 Year 38 Year 39 Year 40 Year 41 Year 42 Year 43 Year
575.6 587.1 598.8 610.8 623.0 635.5 648.2 661.2
(143.9) (146.8) (149.7) (152.7) (155.8) (158.9) (162.0) (165.3)
431.7 440.3 449.1 458.1 467.3 476.6 486.1 495.9

431.7 440.3 449.1 458.1 467.3 476.6 486.1 495.9

(86.3) (88.1) (89.8) (91.6) (93.5) (95.3) (97.2) (99.2)
345.3 352.3 359.3 366.5 373.8 381.3 388.9 396.7

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0 0 0 0 0 0 0 0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
44 Year 45 Year 46 Year 47 Year 48 Year 49 Year 50 Year
674.4 687.9 701.6 715.7 730.0 744.6 759.5
(168.6) (172.0) (175.4) (178.9) (182.5) (186.1) (189.9)
505.8 515.9 526.2 536.7 547.5 558.4 569.6

505.8 515.9 526.2 536.7 547.5 558.4 569.6

(101.2) (103.2) (105.2) (107.3) (109.5) (111.7) (113.9)
404.6 412.7 421.0 429.4 438.0 446.7 455.7

0.0 0.0 0.0 0.0 0.0 0.0 0.0

0 0 0 0 0 0 0

0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0