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Seconded, the "averaging" bit does not make much sense because a) your own analysis has a clear outlier, DELL @ 30.87 b) its a rather overtly simple way of churning out a number for RIM (you should look into weighting the different deals in accordance with the extent to which each deal is relatively similar to RIM's case.
The Guideline Transactions Method used above, has not taken any sort of marketability and size premium into account. Adjustments need to be made here, since RIM has a brand equity unmatched by the companies taken over in accordance with your article.
The most disappointing aspect of this article, I must say would be your estimates for FY15. Your outright rejection of any SG&A as well as R&D, is surprising, since the 80% of your valuation derives itself from the multiples and its subsequent use to estimate price. If you were to simply straight-line SG&A and R&D from FY 14 onwards, thats a approx. 36% combined margin for FY15, that you've decided to free up (reasoning being unknown); Your EBIDTA has shot through the roof with a whopping 2046% and FCF from ($550) to $610; these factors alone have rendered your analysis void of any logical implications.
That being said, apart from the numbers, the article provides a quick snapshot of RIM and its competitors, and the spirit in which you've written is commendable; you have gone a long way to build a comps. model, the least you can do is to revise your assumptions, or state why such fluffy assumptions would hold any water going forward.
PS: its OK if your analysis turned out to be facing a dead end; changing your assumptions to suit your objective (whatever they maybe) is NOT the solution to a fundamentally sound analysis.
Jan 2 06:31 PM
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