CHAPTER 6
Building a Transaction Model
On two occasions I have been asked, ‘Pray, Mr. Babbage, if you put into the machine wrong figures, will the right answers come out?’ … I am not able rightly to apprehend the kind of confusion of ideas that could provoke such a question.
—Charles Babbage, Passages from the Life of a Philosopher, 1864
Garbage in, garbage out.
—Attributed to George Fuechsel, IBM, late 1950s
INTRODUCTION
At long last, we arrive at the final phase of M&A valuation and financial modeling—building a transaction model. To get here, we had to clear away the clutter of competing M&A valuation approaches by identifying the two that are most essential: comparable companies/transactions and DCF analysis. Dominant on Wall Street, these ...
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