Case Detail

Case Summary

Teuer Furniture (B): Multiples Valuation

Case Number: 5-313-509(B), Year Published: 2014

HBS Number: KEL788

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Key Concepts

Discounted Cash Flow, Entrepreneurial Finance, Financial Strategy, Multiples, Valuation

Abstract

Teuer Furniture is a privately owned, moderately sized chain of upscale home furnishing showrooms in the United States. By the end of 2012, it had regained its financial footing and a number of long-term investors, including several of Teuer's original non-management investors, now want to sell their shares. At the request of the board, Jennifer Jerabek, the chief financial officer of the company, and her team put together an extensive valuation of Teuer based on a discounted cash flow analysis. When the model was presented to investors, a number of them disagreed with the results. Some investors considered the value too high; others considered it too low. Not surprisingly, some of the differences of opinion were correlated with whether or not the investors wanted to sell their shares of Teuer. Jerabek was instructed to build a valuation of Teuer using a multiples approach instead.

Learning Objectives

After reading and analyzing the case, students will be able to:

  • Estimate the value of a firm using a multiples approach
  • Select an appropriate group of comparable firms and defend the logic behind the selection
  • Select a correct set of valuation ratios and defend the logic behind the selection
  • Compare the valuations produced by a multiples and DCF approach and if the valuations do not match, explain why the two methods yield different valuations

Number of Pages: 16

Extended Case Information

Teaching Areas: Finance

Teaching Note Available: Yes

Geographic: United States

Industry: Furniture Retail

Organization Name: Fictional

Organization Size: Medium

Decision Maker Position: Chief Financial Officer

Decision Maker Gender: Female

Year of Case: 2012