The Scenario
The owner of a successful Johannesburg-based logistics company (R40M annual revenue, R6M net profit) wants to sell and retire. A potential buyer asks: "What is this business worth?" A broker has quoted R30M. The buyer wants an independent valuation.
The Brief
Build a DCF valuation model. Project free cash flows for 5 years, calculate a terminal value, and discount everything back to arrive at an enterprise value. Then bridge to equity value.
Deliverables
- A 5-year free cash flow projection with revenue growth, margins, capex, and working capital assumptions
- The terminal value calculation using the perpetuity growth method (with a justified growth rate)
- The WACC calculation with each component explained (cost of equity, cost of debt, capital structure)
- The enterprise value, net debt adjustment, and final equity value with a comparison to the R30M asking price
Submission Guidance
A DCF is only as good as its assumptions. State every assumption explicitly. Terminal value typically represents 60-80% of total value — if yours does not, check your growth rate and discount rate.
Submit Your Work
Your submission is graded against the rubric on the right. If you pass, you get a public Badge URL you can share on LinkedIn. There is no draft save, so work offline first and paste your finished response here.