Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Aon plc's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.2% to 8.9% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 124, DPO 120, DIO 60). At a 7.5% WACC with mid-year discounting, the terminal value (83% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 15.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $441.98 per share, suggesting AON is undervalued by 36.5% at the current price of $323.77.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 5,286 | 5,634 | 5,982 | 6,518 | 7,101 | 7,279 |
| (−) Net Interest | 696 | 742 | 788 | 859 | 936 | 959 |
| (+) D&A | 213 | 240 | 259 | 269 | 293 | 300 |
| EBITDA | 6,195 | 6,616 | 7,029 | 7,646 | 8,330 | 8,538 |
| (−) Tax | 1,143 | 1,218 | 1,294 | 1,410 | 1,536 | — |
| (−) CapEx | 271 | 289 | 307 | 334 | 364 | — |
| (−) ΔWC | 3,222 | 301 | 301 | 463 | 505 | — |
| Free Cash Flow (FCF) | 1,559 | 4,808 | 5,128 | 5,440 | 5,926 | — |
| Peers' EBITDA Multiple | 15.6x | |||||
| Terminal Value | 132,939 | |||||
| WACC / Discount Rate | 7.53% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,503 | 4,312 | 4,277 | 4,219 | 4,274 | 92,469 |
| Enterprise Value | 111,054 | |||||
| Projection Period | 18,585 | 16.7% | ||||
| Terminal Value | 92,469 | 83.3% | ||||
| (−) Current Net Debt | 15,336 | |||||
| Equity Value | 95,718 | |||||
| (÷) Outstanding Shares | 217M | |||||
| Fair Price | $442 | +36.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 11.6x | 13.6x | 15.6x | 17.6x | 19.6x |
|---|---|---|---|---|---|
| 5.5% | $368 | $428 | $489 | $549 | $609 |
| 6.5% | $350 | $407 | $465 | $522 | $580 |
| 7.5% | $332 | $387 | $442 | $497 | $552 |
| 8.5% | $316 | $368 | $420 | $473 | $525 |
| 9.5% | $300 | $350 | $400 | $450 | $500 |
Current price: $323.77. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.