The GE End Game: Bataan Death March or Turnaround Play? | Value Investing News

The GE End Game: Bataan Death March or Turnaround Play?

  • It was in 1980, when Jack Welch became the CEO of the company, that the company started its march towards what it has become today.
  • Since GE will be trying to sell these businesses to buyers today, this is a pricing and not a valuation exercise, and I have estimate a pricing for GE's businesses below, using an EBITDA recomputed using the average operating margin in each business over the last five years to compute operating income and allocating corporate expenses to the divisions, based upon revenues.
  • To get a better sense of what the businesses would be worth, as continuing operations, I valued each of GE's business, using simplistic assumptions: I used the sector cost of capital for each business, set growth in the next five years equal to revenue growth in each of GE's businesses in the last five years and normalized operating income based upon the average operating margin that each of GE's businesses have delivered over the last five years:
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