Morgan Stanley | RESEARCH
NORTH AMERICA INSIGHT ~~
Appendix A: Company Scenario Analysis
In the following tables, we flex the inputs in our SOTP valuation methodology to take a look at the potential impact at varying fee related earnings multiples and multiples on future carry. We use the same assumptions that we used in our upside scenario above, including a fully taxed (@24%) net carry receivable value as well as using a multiple on after tax net carry per share for future perform- ance fees.
For fee-related earnings, we use constant multiples for all com- panies. We begin with 12.5x, a slight discount to where the traditional asset managers trade today, and end at 30x, or closer to our bond
yield cap rate multiple approach.
On performance fees, we set the mid point at our estimate for the current market implied multiple on performance fees (using a 15x FRE as our starting point), as explained in our valuation methodology
above.
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