Teuer Furniture: Discounted Cash Flow Valuation REVISED NOVEMBER 3, 2015[pic 1][pic 2][pic 3][pic 4][pic 5]MITCHELL A. PETERSEN 5-313-509(A)Teuer Furniture (A):Discounted Cash Flow ValuationIn 2012, Teuer Furniture—a privately owned, moderately sized chain of upscale homefurnishing showrooms in the United States—had survived the economic recession and wasgrowing. As the firm was now on secure financial ground, a number of long-term investors,including several of Teuer’s original non-management investors, asked to sell their shares. Upuntil this point, Teuer had distributed its excess cash flow in the form of dividends and hadavoided repurchasing stock from its investors because of the difficulty of valuing a private firm.The firm had never repurchased shares from its investors. Teuer’s decision of whether to financethe investor buyout from cash generated by the business or to seek new equity investors waspostponed until a valuation of the business could be obtained. To begin the valuation process,Teuer’s chief financial officer, Jennifer Jerabek, and her finance team were asked to assemble aset of forecasts upon which the valuation and stock price would be based.
